The Securities and Exchange Commission has opened a review of public disclosures made by companies that received government bailout money.
Reuters reported that SEC chairman Mary Schapiro said her office was concerned about the quality of information that bailout recipients have been providing to investors.
The issue of disclosure to investors, while important in even the best economic climate, has grown in importance since the economic collapse began last year, wiping out billions of dollars in equity.
Moreover, critics have raised questions about what the recipients of the money are doing with it. When it began, the government said the purpose of the $700 billion Troubled Asset Relief Program was to encourage lending by financial institutions.
Few of the banks that have received the money, however, have been willing to say how they are using it, while others have promised to return the money in order to avoid what they perceived as onerous regulations by the Treasury Department.
Questions about disclosure have also complicated Bank of America Corp.'s purchase of Merrill Lynch & Co. Critics, including New York Attorney General Andrew Cuomo, have said that senior officials in the Bush administration pressed Bank of America executives to minimize disclosure of losses at Merrill Lynch in order to make sure the deal went through.
In related developments, three U.S. senators introduced legislation this week to increase transparency in the bailout program.
The TARP Transparency Act, sponsored by Senators Mark R. Warner of Virginia, Mel Martinez of Florida and Sherrod Brown of Ohio, would create a single database to organize information about TARP recipients and contractors.
"Our legislation creates a database and auditing system that will collect and disclose this information in a consistent and standardized format," Warner said. "Greater TARP transparency will allow regulators to be more proactive in protecting the taxpayers' investment, and it will help us spot potential waste, fraud and abuse."
Reuters reported that SEC chairman Mary Schapiro said her office was concerned about the quality of information that bailout recipients have been providing to investors.
The issue of disclosure to investors, while important in even the best economic climate, has grown in importance since the economic collapse began last year, wiping out billions of dollars in equity.
Moreover, critics have raised questions about what the recipients of the money are doing with it. When it began, the government said the purpose of the $700 billion Troubled Asset Relief Program was to encourage lending by financial institutions.
Few of the banks that have received the money, however, have been willing to say how they are using it, while others have promised to return the money in order to avoid what they perceived as onerous regulations by the Treasury Department.
Questions about disclosure have also complicated Bank of America Corp.'s purchase of Merrill Lynch & Co. Critics, including New York Attorney General Andrew Cuomo, have said that senior officials in the Bush administration pressed Bank of America executives to minimize disclosure of losses at Merrill Lynch in order to make sure the deal went through.
In related developments, three U.S. senators introduced legislation this week to increase transparency in the bailout program.
The TARP Transparency Act, sponsored by Senators Mark R. Warner of Virginia, Mel Martinez of Florida and Sherrod Brown of Ohio, would create a single database to organize information about TARP recipients and contractors.
"Our legislation creates a database and auditing system that will collect and disclose this information in a consistent and standardized format," Warner said. "Greater TARP transparency will allow regulators to be more proactive in protecting the taxpayers' investment, and it will help us spot potential waste, fraud and abuse."
published April 30, 2009, 0 Comments
Leave a comment