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Press Release

POGO Responds to GAO Report on Bailout

POGO welcomes the recently released Government Accountability Office (GAO) report, Troubled Asset Relief Program/Additional Actions Needed to Better Ensure Integrity, Accountability and Transparency, the first oversight report regarding the administration's bailout program for the financial sector, known as the Troubled Asset Relief Program or TARP.

One aspect of the report particularly grabbed POGO's attention. In concluding that it is "too soon to determine whether the program is having the intended effect on credit and financial markets," the GAO pointed out that the Treasury Department "has yet to address a number of critical issues," and made nine separate recommendations.

In response, the head of TARP, Assistant Secretary Neel Kashkari, told GAO:

Treasury also agrees with the recommendation that it should develop means to determine whether financial institutions are complying with the requirements explicitly imposed on them in our purchase agreements and under the statute. We have a different perspective, however, on what is needed to evaluate how individual institutions participating in the CPP [Capital Purchase Program] are spending the funds they receive under the program.

Treasury spokespeople refused to define what Kashkari's "different perspective" might entail. In his letter, Kashkari says that Treasury would welcome "further discussion on general metrics for evaluating the overall success" of the program. POGO is troubled that nothing more than "general metrics" are being developed. POGO also finds it troubling that both Treasury and the Fed are essentially telling the public that there will be no specifics demanded of how their money is being used by the recipient entities.

A few weeks ago, POGO sent a letter to the Chairs and Ranking Members of several committees in the House and Senate raising concerns about the stunning lack of openness and transparency in the government's response to the economic crisis.