Major banks have made a number of "very large, questionable transactions" since receiving bailout money, a House subcommittee said today.
The House Oversight and Government Reform's domestic policy subcommittee, in a memorandum released ahead of an oversight hearing on Wednesday, also charged that the Treasury Department has failed to sufficiently oversee the Capital Purchase Program, the part of the Troubled Asset Relief Program (TARP) dedicated to shoring up the nation's banks.
According to the committee, none of the questionable transactions were illegal. However, "members of Congress might not consider them the kind of transactions they believed TARP would subsidize," the memorandum said.
The transactions included a $2 billion repurchase by Goldman Sachs Group, Inc. of its own company stock. Goldman Sachs Group received $10 billion in TARP funds on October 26, 2008.
The subcommittee said it identified the questionable transactions through testimony from Dow Jones & Co., the business information firm.
Also singled out for scrutiny were an $8 billion loan from Citigroup Inc. to public sector entities in Dubai; a $1 billion investment by J.P. Morgan Chase & Co. in the development of cash management and trade finance solutions in India; and a $7 billion investment by Bank of America Corp. in a Chinese bank.
The committee also identified a number of oversight failures by the Treasury Department's Office of Financial Stability (OFS), which administers the TARP program.
OFS's efforts to track the use of bailout funds is limited by the fact that only the 20 largest recipients are required to file monthly reports on their activities. So far, more than 450 banks have received TARP money.
Moreover, the committee noted that the monthly reports "do not provide details about any individual transaction, no matter how significant," and they only address bank lending activities, not other investments or expenditures.
The committee said that, although Treasury has the right under the TARP program to inspect the books of participating banks, it has largely failed to do so, "nor has Treasury questioned any TARP recipient about its use of TARP funds."
The committee will hear testimony on the use and oversight of TARP funds on Wednesday. Witnesses will include Acting Interim Assistant Secretary for Financial Stabilization Neel Kashkari and Neil M. Barofsky, special inspector general for the TARP program.
The House Oversight and Government Reform's domestic policy subcommittee, in a memorandum released ahead of an oversight hearing on Wednesday, also charged that the Treasury Department has failed to sufficiently oversee the Capital Purchase Program, the part of the Troubled Asset Relief Program (TARP) dedicated to shoring up the nation's banks.
According to the committee, none of the questionable transactions were illegal. However, "members of Congress might not consider them the kind of transactions they believed TARP would subsidize," the memorandum said.
The transactions included a $2 billion repurchase by Goldman Sachs Group, Inc. of its own company stock. Goldman Sachs Group received $10 billion in TARP funds on October 26, 2008.
The subcommittee said it identified the questionable transactions through testimony from Dow Jones & Co., the business information firm.
Also singled out for scrutiny were an $8 billion loan from Citigroup Inc. to public sector entities in Dubai; a $1 billion investment by J.P. Morgan Chase & Co. in the development of cash management and trade finance solutions in India; and a $7 billion investment by Bank of America Corp. in a Chinese bank.
The committee also identified a number of oversight failures by the Treasury Department's Office of Financial Stability (OFS), which administers the TARP program.
OFS's efforts to track the use of bailout funds is limited by the fact that only the 20 largest recipients are required to file monthly reports on their activities. So far, more than 450 banks have received TARP money.
Moreover, the committee noted that the monthly reports "do not provide details about any individual transaction, no matter how significant," and they only address bank lending activities, not other investments or expenditures.
The committee said that, although Treasury has the right under the TARP program to inspect the books of participating banks, it has largely failed to do so, "nor has Treasury questioned any TARP recipient about its use of TARP funds."
The committee will hear testimony on the use and oversight of TARP funds on Wednesday. Witnesses will include Acting Interim Assistant Secretary for Financial Stabilization Neel Kashkari and Neil M. Barofsky, special inspector general for the TARP program.
published March 9, 2009, 0 Comments
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