David Kirkpatrick

January 9, 2009

The Fed equals fail

Filed under: Politics — Tags: , , , — David Kirkpatrick @ 3:09 pm

This news isn’t really news for anyone who’s been paying attention.

From the link:

The U.S. Treasury has done nothing to ensure a $700 billion financial bailout fund is used to stabilize the weak mortgage market, which caused the U.S. economic crisis, a congressional watchdog said on Friday.

Elizabeth Warren, who heads a congressionally appointed oversight panel, told ABC news there was no evidence the Treasury had used money from the Troubled Asset Relief Program to support the housing market by avoiding preventable foreclosures.

“There’s just no money that’s gone in that direction. This one’s not even arguable,” she said. “The TARP funds themselves have not been used in this way despite congressional statutes requiring them to do so.”

In a draft of a report to be released on Friday, the panel said the Treasury has failed to reveal its strategy for stabilizing the financial system and had done little to track how the money was used.

It cited “significant gaps in Treasury’s monitoring of the use of taxpayer money,” including asking financial institutions to account for what they have done with taxpayer funds.

It also questioned whether Treasury has fulfilled its obligations to Congress.

“For Treasury to take no steps to use any of this money to alleviate the foreclosure crisis raises questions about whether Treasury has complied with Congress’s intent that Treasury develop a ‘plan that seeks to maximize assistance for homeowners,'” the panel said in the report.

The panel said the Treasury hasn’t used any of TARP’s first $350 billion tranche to help borrowers refinance or deal with mortgages that have a face value that is more than the current market value of their homes.

“Treasury needs to be clear as to what, if anything, it has done, and if it insists on taking credit for private sector efforts, it must explain what ‘help’ means,” the draft report said.

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