When
the Treasury Department hired the accounting firm of PricewaterhouseCooopers
LLP in October to work on the Troubled Asset Relief Program, it said the
initial order was worth $191,469.
Four
months later, the value of the contract - whose financial terms were blacked
out by the Treasury Department - has grown to more than $1.6 million.
Similarly,
the Treasury Department's agreement with the accounting firm of Ernst &
Young has risen from the initial amount of $492,006 to nearly $2 million.
The terms of that deal also have never been made public.
The
revised contract values were reported in the Government Accountability Office's
latest update on the transparency and oversight of the $700 billion financial-industry rescue program.
That
same report shows that the law firm of Sonnenschein Nath & Rosenthal LLP
has assumed responsibility for two contracts that the Treasury Department had
awarded to Thacher Proffitt & Wood LLP, which dissolved in January.
One
of those contracts was to advise the Treasury Department on the purchase of
asset-backed securities, The other was to provide legal services on the
government's loans to the auto industry.
The Treasury Department did not issue a
press release on the latter contract. According to the GAO report, it was
awarded on Nov. 7, 2008, with an initial value of $233,663. The agreement was
modified twice in December, boosting the contract ceiling price to $1.46
million. The second adjustment, which added $1 million of that amount, came after Thacher
Proffitt announced that it was shutting down.
Thacher
Proffitt had been one of the leading law firms in the field of mortgage-backed
and asset-backed securities. Its fortunes declined as the economic crisis set
in and the market for those securities collapsed.
About
100 Thacher Proffitt lawyers moved to Sonnenschein Nath at the start of this year.
The
Treasury Department said in December that Thacher Proffitt's contract to provide
advice on asset-backed securities had an initial term of six
months and was not expected to cost more than $500,000.
The contract that the department posted on its website concealed the
hourly rate it agreed to pay for firm's services. The document noted that
the government would pay for no more than 1,300 hours of legal work.
The
GAO said in its report that the Treasury Department's first task order under
the agreement was worth $249,999.
BailoutSleuth
filed requests under the Freedom of Information Act for unredacted copies of
the PricewaterhouseCoopers and Ernst & Young contracts. We also have
asked for the first contract the government awarded to Thacher Proffitt.
Nearly
three months have passed and the Treasury Department has yet to release them or
provide us with a reason why they should remain confidential.
published February 13, 2009, 3 Comments
Look for the press, legislators to make the big 4 into the next smear target (see Halliburton). Us huddled masses have to have something to take our focus off of the pork-a-palooza that passed yesterday.
You know, sites like these need to be more mainstream. I cannot believe what money is being spent on and we don't even have all the facts.
Bank of America is spending 10 million in Super Bowl parties, Merrill's bosses are getting $121m paid to the top four, the next 10 recipients took home $128m in incentive pay, while the top 149 bonus recipients got a total of $858m. And all this time they were asking for a $20bn dollar bailout?
There are some great articles found below that truly compliment the bailoutsleuth and the information they provide.
http://www.gotoguy.com/topics/economy/
The initial PwC and E&Y contract prices were misleading, of course. The firms either bid low, knowing fees would run up later; or grossly underestimated the size and complexity of the work to be done. The truer alternative seems plain. That Treasury would not be conscious of the likely run up is either willfully blind or wholly negligent. Here too, the truth seems clear. The work done by BailoutSleuth, and others as well as improvements in government transparency will hopefully bear fruit - smart decisions made in the light of day, and not fraudulent decisions under the cloak of night.