Taxpayer Watchdog Opposes Wasting Another $350 Billion

(Washington, D.C.) – The lobbying arm of the nation’s premier taxpayer watchdog group, the Council for Citizens Against Government Waste (CCAGW) today expressed strong opposition to the release of the second $350 billion tranche of the authorized $700 billion for the troubled Troubled Asset Relief Program (TARP). 

President Bush, President-elect Obama and many in Congress are demanding the distribution of the second phase of TARP, albeit with additional, purportedly tougher regulatory strings attached to the money.  Both the establishment and the implementation of the program have been the subject of scathing criticism.  The Associated Press reported in December, 2008 that recipient banks were refusing to divulge how they used the money.  Until recently, the Treasury Department balked at releasing a list of the financial institutions that had received TARP funds.  The Bush Administration opened the door to using the money to bailout the Detroit Three automakers.  And though the enacting legislation called for the creation of a Special Inspector General for TARP to oversee the distribution of the money, the confirmation process has gone no further than identifying a nominee.  Congress’s five-member TARP Oversight Panel has excoriated Treasury for its mismanagement of the $350 billion and its failure to make its activities transparent to taxpayers. 

“TARP was an atrocious gamble in the first place and the taxpayers ended up on the wrong side of that bet,” said CCAGW President Tom Schatz.  “Taxpayers were promised clear results and tough oversight of that money.  Instead, Treasury and the recipient banks have been allowed to keep taxpayers in the dark about where that money went and they are appalled, as well they should be.  And now Congress wants more.”

House Financial Services Committee Chairman Barney Frank (D-Mass.), who early on accepted Treasury Secretary Hank Paulson’s controversial plan to buy up the toxic assets of struggling banks has now pronounced the program insufficient.  Chairman Frank is crafting a bill that would allow Treasury to release the second $350 billion to an even broader array of recipients, including smaller community banks to purchase commercial real estate loans, mortgage-backed securities and municipal securities.  He would also direct the money toward the reworking and purchase of the underlying non-performing mortgages, although under purportedly much stricter accountability requirements.  Frank intends to include provisions to cap executive salaries of participating banks and even claw back executive compensation and bonuses from previous recipients, unprecedented government intrusions into private markets.  In a January 12 New York Times blog, University of Connecticut law professor Steven M. Davidoff called it “bailout creep in the making.”

“The nation faces an unprecedented $1.2 trillion deficit.  Yet the new administration and Congress are running helter-skelter to push both new TARP money and an $800 billion stimulus out the door.  CCAGW opposes the release of any more TARP money, regardless of the allegedly tougher oversight measures promised by Congress.  It is time this Congress stops treating the U.S. Treasury like the Banker in some fictional Monopoly game,” concluded Schatz.

CCAGW is the lobbying arm of Citizens Against Government Waste, the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.