Auditors say the Treasury has "critical issues"
Per the Financial Times (link below):
The US Treasury has failed to address “critical issues” in implementing the $700bn financial rescue plan, including how to ensure that banks are complying with executive pay limits, a congressional watchdog said on Tuesday.
The Government Accountability Office (GAO) noted a few issues with the Treasury's $700 billion TARP program:
- The aforementioned lack of oversight into executive pay limits compliance.
- Lack of oversight into dividend restrictions.
- General internal control issues.
- The kicker: "The GAO added that the Treasury had not yet finalised oversight procedures for its growing number of contractors and financial agents, while there was no procedure for monitoring potential conflicts of interest arising from the department’s growing reliance on the private sector."
My gut thoughts are that 1) this is still more evidence that we're making things up as we go...great for improv, terrible for fiscal policy. and 2) we already have the fox guarding the henhouse/the inmates running the asylum/the fat kid protecting the cupcakes (choose your favorite metaphor) in former Wall Streeters like Paulson and Kashkari running the show...and it's only going to get more incestuous. The scary thing is, I don't know a better solution (short of having Nassim Nicholas Taleb (The Black Swan guy) go wild on this). The choice is a bunch of Wall Street insiders or a bunch of academic economists. One is way too close to the problems and the main players and the other too far removed in ivory towers of theory.