The New York Times reports that the General Accounting Office is readying to issue a report that will criticize how Treasury has handled its spending under the $700 billion TARP program. The main shortcomings are failure to track how the money is actually being used and inadequate controls to prevent conflicts of interest.
Gee, I thought those supposed failings as features rather than bugs.
From the New York Times:
The first operational audit of the $700 billion financial rescue plan, to be delivered to Congress next Tuesday, is expected to be critical of the Treasury Department’s failure to set up ways to track how its bailout money is being used in the marketplace, according to people briefed on a draft of the report.
The audit, done by the Government Accountability Office, is also likely to call for tighter controls over the conflicts of interest that are arising as financial specialists, institutions and law firms are hired for Treasury work that could later aid their private-sector clients….
The Treasury Department has been criticized already in Congress for not tying more strings to its investments in banks and other financial institutions.
Through its Capital Purchase Program, it has injected $160 billion into the banking system through the purchase of preferred shares. But auditors found that no plan had been put in place to track how, or whether, that money is being put to use by the first eight institutions that received it.
The personnel consequences of the Treasury’s unexpected shift in strategy in the rescue plan — from the purchase of so-called troubled assets on financial balance sheets to the injection of capital directly into financial institutions — also drew attention from the auditors, those briefed on the study said.
The audit team noted that Treasury already had hired staff members for the initial mission, some of whom were not necessary or best suited for the work required under the new strategy.
Note that the article did say the GAO toned down its report out of recognition that the TARP is a new, rapidly implemented program.
However, also note that the Department of Defense has been unable to account for trillions of spending, so the Treasury has plenty of company.