POGO sent a letter today calling on Congress to review the legitimacy of the Federal Deposit Insurance Corporation's (FDIC) role in the recently announced Legacy Loans Program (LLP).
This letter follows a public comment submitted to the FDIC last week raising concerns over whether the FDIC has the statutory authority to participate in the LLP. Under the terms of the program, the FDIC will be invoking an emergency authority that potentially places billions of taxpayer dollars at risk without any consideration by, or oversight from, the Congress.
The lack of Congressional oversight is particularly troubling given that the FDIC has not clearly articulated a strategy for protecting taxpayers against waste, fraud, and abuse in the LLP. Ever since the program was announced, numerous reports have circulated showing that there are ample opportunities for savvy investors to "game the system." POGO is also concerned that the FDIC has not explained how it will identify and prevent conflicts of interest among the third party firms that will be assisting in the valuation of the toxic assets.
"This is just the latest example of the administration keeping the public in the dark about the true costs of the bailout," said POGO Executive Director Danielle Brian. "Congress needs to get involved before it's too late."