The Treasury Department has begun to better inform Congress and the public about the results of the government's financial bailout program, a past failure that had threatened to undermine the initiative, according to federal auditors.
In a review of the Troubled Asset Relief Program published on Thursday, the Government Accountability Office reported that the department has followed GAO recommendations to keep the public and Congress informed of changes and developments through Treasury's Web site.
"In light of the backlash from Congress and others regarding Treasury's initial shift in the program from purchases of mortgages and mortgage-backed securities to capitalization of financial institutions, we made a series of recommendations over the past year aimed at improving . . . communication with Congress and the public," the report stated. "Treasury continues to take steps to address these recommendations, including hiring a communications officer, integrating communication into TARP operations, scheduling regular and ongoing contact with congressional committees and members, and attempting to leverage technology."
In March, GAO reported that Treasury had poorly communicated the financial results of the bailout program, which could have jeopardized future funding for the initiative. For example, the Obama administration failed to report the government received almost $3 billion in dividend payments from its investments.
Improvements to FinancialStability.gov, the Web site of the bailout program, include the addition of a user survey to collect feedback. Treasury's Office of Financial Stability also formed a working group to ensure the department coordinates internal and external communications and plans to hire appropriate staff to support its communications strategy. The department plans to hire a director of communications who will be stationed at the office, as GAO noted.
Treasury also now publishes online a monthly lending survey of the 22 largest financial institutions in the bailout's capital purchase program. The program, Treasury's largest initiative to stabilize the financial system, will provide as much as $218 billion to banks through the purchase of preferred shares and warrants.
But some Congress members said the quality of the information that Treasury is posting falls short of transparency. "The most fundamental thing is to know how much taxpayers are on the hook for and how much assets are being spent and what they are going toward," said Kurt Bardella, spokesman for Rep. Darrell Issa, R-Calif., the ranking member on the Oversight and Government Reform Committee.
Bardella pointed to a report issued by the special inspector general for TARP this summer that criticized Treasury for not upholding its promise of openness. The July 21 report to Congress found that TARP has become a program in which taxpayers are not being told what most fund recipients are doing with their money, how much their substantial investments are worth or the full details of how their money is being invested.
"In [the special inspector general's] view, the very credibility of TARP (and thus in large measure its chance of success) depends on whether Treasury will commit, in deed as in word, to operate TARP with the highest degree of transparency possible," the report stated.
Bardella said he is pleased that Treasury is enhancing its site, but "the more important questions are those being raised by the [special inspector general]."
David John, a senior research fellow at the Heritage Foundation, a think tank that supports limited government, said, "It is very fine for them to have improved communications, but the overall program was flawed from the start. The Titanic had good communications, but it still sank."
Financial institutions said the site's online disclosures strike the right balance between holding banks accountable and preventing market disruption. "You can see who got what, who repaid what -- all the facts and figures that taxpayers need to know," said Scott Talbott, senior vice president for government affairs at the Financial Services Roundtable, an industry group. "There's a risk here -- you don't want to reveal sensitive information that could lead an investor or a depositor to draw incorrect conclusions about an institution which could have