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WASHINGTON, February 10, 2009 – Without better oversight, the TARP bank bailout program will continue to fail, according to a report from a watchdog group. But U.S. PIRG, the Washington D.C. office MASSPIRG, expects today’s expected TARP reform announcements from the Obama Administration will include major improvements in oversight and accountability that will also benefit from continued use of the new US. PIRG TARP report card for evaluation. Pre-announcement news reports that Obama seeks “clarity” and “consistency” and “stress” evaluations of banks before receiving aid are encouraging and support the group’s recommendations.
“Taxpayers deserve to know what reforms will be in place before another $350 billion is lost into a black hole of executive bonuses, lobby expenses and mergers instead of jumpstarting the economy by making loans,” said Nicole Tichon, Tax and Budget Reform Advocate for U.S. Public Interest Research Group.
“If the oversight and transparency measures we propose had been in place for the first installment of the TARP, we’d at the very least know where the money went and why. The Troubled Asset Relief Program (TARP) was established by Congress in the fall of 2008 to inject capital into the financial system. Half of its $700 billion appropriation was distributed by the Bush Treasury Department and the remainder is to be distributed under plans expected to be announced today by the Obama administration.
Among the key findings of the U.S. PIRG Education Fund report, “Failed Bailout: Lessons for Obama from Bush’s Failures on TARP,” are the following:
- The TARP program never met its original goal to stimulate lending and it never had a plan. It “lurched” from new program to new program without effect on the economy. For example, one day Citibank qualified for money as a healthy bank; on another, as a failing bank.
- The Bush Administration never asked TARP recipient banks what they planned to do with the taxpayer money, nor did it require reporting on what they did with it, as at least three of the government’s own watchdog agencies have found.
- Bush received an overall F and a zero on 26 of 27 evaluation parameters in the U.S. PIRG TARP report card.
- Other government agencies, technology firms, consumer organizations and universities all have similar report card systems established to provide product or service reports so that their stakeholders can make informed decisions; U.S. PIRG urges the government to adopt one for the TARP.
“President Obama has a big challenge reforming this failed program so it will save banks but protect taxpayers and boost the economy,” Deirdre Cummings, Legislative Director for MASSPIRG. “If his proposals follow our oversight recommendations, which we believe are supported by the American public, and early reports are that they do, his bailout will be better and his grades will be certainly be higher than Bush’s.”
MASSPIRG is a non-partisan, no-profit public interest advocacy groups that take on powerful interests on behalf of their members. More information on MASSPIRG and its Campaign to Save America’s Financial Future is available at MASSPIRG.org.
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