As banks repay loans, Treasury to ask how bailout money spent

After more than a year of debate, the Treasury Department has decided to ask individual banks specifically how they used money from the $700 billion bailout.

The special inspector general over the Troubled Asset Relief Program (TARP), as the bailout is known officially, has pressed Treasury repeatedly to investigate how the money was used.

While economists and some lawmakers credit TARP with helping to stabilize the economy, the program remains one of the most controversial government efforts in decades and a constant source of debate in Congress.

The new survey comes as the administration and Federal Reserve announce steps to wind down bailout programs. The nation’s largest banks, which were also the first to receive more than a total of $100 billion, have repaid or are in the process of repaying the money.

The new “Use of Funds Survey” will cover all financial institutions that received capital injections from the date they got the money through the third quarter of 2009, according to a Treasury document obtained by The Hill.

The Treasury Department did not respond to requests for comment.

The electronic survey will ask firms to provide qualitative information about the capital injections and refer to quantitative information as necessary.
The Treasury Department will post the responses online, as well as a summary of the responses.

Neil Barofsky, the inspector general, has criticized Treasury for not reporting more detail on how the money has been used. His office surveyed firms earlier this year and posted responses online for 360 banks.

Treasury responded in July that it was not possible to say that specific TARP money went to specific loans, investments or other activities.

“The fact that there may be some limitations on the precision of the data that could be collected by requiring use of funds reporting does not mean that such reporting could not generate meaningful information,” Barofsky wrote in response.

In his latest report on the use of funds, issued Dec. 10, Barofsky said that Treasury had rejected the possibility of a survey as recently as September.
But he said that the two offices continued to discuss that possibility.

“We believe that Treasury’s decision to provide this basic transparency will provide meaningful information to the public and to policymakers on whether the TARP programs have met their goals and, as a result, will significantly enhance the credibility of TARP,” Barofsky wrote in the December report.

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