Friday, January 9, 2009

Congressional Oversight Panel Says TARP Funds Were Not Used to Prevent Foreclosures

In a draft report to be released today, the Congressional Oversight Panel for Economic Stabilization criticizes the U.S. Treasury’s implementation of the Troubled Asset Relief Program (TARP), saying that the Treasury has failed to answer basic questions about the program and provided little evidence demonstrating its effectiveness.

Most specifically, the panel says TARP funds have done little to mitigate foreclosures – a requirement of the law that created the $700 billion program.

Despite Interim Assistant Secretary of the Treasury for Financial Stability Neel T. Kashkari's assertion that the rescue plan has already begun reducing foreclosures and increasing liquidity in the financial system, Elizabeth Warren, who heads the oversight panel, believes otherwise. Warren recently told ABC news there was "no evidence the Treasury had used money from TARP to support the housing market by avoiding preventable foreclosures."

Moreover, the panel also asserts that the Treasury must use a standard system to monitor the lending practices of banks receiving capital infusions, in order to prove that these practices are working and providing liquidity. Additionally, the report criticizes the executive compensation restrictions on banks that receive TARP money, as no uniform measures for reduced executive compensation is currently in place.

Visit the Congressional Oversight Panel Web site to view additional information and news updates.

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