Oversight Panel To Release Critical Report On TARP

According to WSJ a panel set up to oversee the Treasury Department’s capital purchase program of banks, led by Harvard Law School professor Elizabeth Warren, is expected to release a report Wednesday highly critical of the government’s handling of the bailout.

The report is expected to raise fresh questions about the Treasury’s Troubled Asset Relief Program at a time when many lawmakers expect the current administration to seek access to the second half of the Treasury Department’s $700 billion financial-rescue fund.

The panel’s top official, Harvard Law School professor Elizabeth Warren, is scheduled to describe her findings to the House Financial Services Committee Wednesday. Among other things, a draft of the report posed 10 questions to Treasury, which pressed officials for a clearer strategy, asked whether there is sufficient accountability, and why more hasn’t been done to help prevent foreclosures.

The roughly 30-page report is also expected to press Treasury to describe whether the money used to inject capital into the banking sector is a “giveaway” or a “fair deal,” according to one person familiar with the report.

When the Treasury unveiled its plan in October to buy stakes in banks, the move was heralded as a potential savior for the bleeding banks and financial firms. Now however, critics of the proposal are growing by the day and the use of bailout funds has come under intense scrutiny. Banks that have been approved for TARP cash seem to intend on using the capital for loans as well as acquisitions. In other words, there is capital hoarding as oppose to lending. Yet, the TARP’s purpose was strictly based on re-lending.

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