Auditors Fault Treasury Oversight of Bailout Funds

MICHAEL R. CRITTENDEN
Wall St Journal
Wednesday, Dec 03, 2008

The Treasury Department has failed to address a number of critical issues while implementing the $700 billion financial rescue plan, including how to ensure its efforts are successful, the Government Accountability Office said Tuesday.

The report, which was required by the legislation authorizing the rescue plan, said Treasury has yet to figure out how to make sure financial firms receiving billions of dollars of federal funds comply with limits on executive compensation and dividend payments. (Read the full report.)

On a more basic level, the Treasury's efforts to establish "an effective management structure and an essential system of internal control" are incomplete, the report said.

(ARTICLE CONTINUES BELOW)

"Without a strong oversight and monitoring function, Treasury's ability to help ensure an appropriate level of accountability and transparency will be limited," the report said.

The report also noted that the Treasury has yet to fully staff its Office of Financial Stability, which is implementing the Troubled Asset Relief Program. The office will eventually need as many as 200 full-time employees, the GAO said, but as of Nov. 21 only 48 employees were assigned to the TARP program. Increasing that number in the near term could prove difficult, the report said, because of the many permutations to the program since it was passed by Congress and the transition to the next administration in the White House.

These hiring issues, the report said, could limit the Treasury's ability to keep key leadership positions filled, "potentially creating uncertainty about the direction of the program and impeding efforts to effectively implement TARP."

Full article here