There is "little indication" that lobbyists and politicians are having any influence on which banks receive bailout funding, but the program requires improved control and record-keeping, the program's inspector general said.
Neil M. Barofksy, the special inspector general of the Troubled Asset Relief Program, said in a new report that his office identified 56 banks that were the subject of external communication with Treasury officials working on bailout issues. However, Barofsky's staff "did not identify any instances of external pressure having undue influence during the application review process."
The report was drafted in response to lingering concerns that members of Congress and corporate lobbyists had succeeded in prompting regulators to approve bailout funding for favored banks.
Barofsky did not name the institutions involved in these external communications.
Of the 56 banks mentioned, 29 percent received TARP funding and 21 percent still had applications pending at the end of June. Forty seven percent did not get bailout assistance, and 3 percent decided not to apply, according to the report.
In addition, 13 of the 16 that were funded met clearly the established benchmarks for approval, including examination ratings guidance, four Treasury-established performance criteria, and three critical capital ratios. The three that did not meet those standards established compelling mitigating factors, such as a pending private capital infusion and a convincing management plan.
Although Barofksy found that outside communications have not influenced Treasury decision-making, he recommended that the department make changes in the way it responds to such activity. In particular, he noted that, while the banking agencies all have procedures in place for documenting and responding to written external inquiries, not all have procedures to document oral communications.
"The inconsistency in documenting these communications limits the ability to comprehensively identify and understand all external inquiries" regarding the bailout program, Barofsky wrote.
Neil M. Barofksy, the special inspector general of the Troubled Asset Relief Program, said in a new report that his office identified 56 banks that were the subject of external communication with Treasury officials working on bailout issues. However, Barofsky's staff "did not identify any instances of external pressure having undue influence during the application review process."
The report was drafted in response to lingering concerns that members of Congress and corporate lobbyists had succeeded in prompting regulators to approve bailout funding for favored banks.
Barofsky did not name the institutions involved in these external communications.
Of the 56 banks mentioned, 29 percent received TARP funding and 21 percent still had applications pending at the end of June. Forty seven percent did not get bailout assistance, and 3 percent decided not to apply, according to the report.
In addition, 13 of the 16 that were funded met clearly the established benchmarks for approval, including examination ratings guidance, four Treasury-established performance criteria, and three critical capital ratios. The three that did not meet those standards established compelling mitigating factors, such as a pending private capital infusion and a convincing management plan.
Although Barofksy found that outside communications have not influenced Treasury decision-making, he recommended that the department make changes in the way it responds to such activity. In particular, he noted that, while the banking agencies all have procedures in place for documenting and responding to written external inquiries, not all have procedures to document oral communications.
"The inconsistency in documenting these communications limits the ability to comprehensively identify and understand all external inquiries" regarding the bailout program, Barofsky wrote.
published August 10, 2009, 0 Comments
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