Troubled Asset Relief Program: One Year Later, Actions Are Needed to Address Remaining Transparency and Accountability Challenges
GAO-10-16
Published: Oct 08, 2009. Publicly Released: Oct 08, 2009.
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Highlights
GAO's eighth report assesses the Troubled Asset Relief Program's (TARP) impact over the last year. Specifically, it addresses (1) the evolution of TARP's strategy and the status of TARP programs as of September 25, 2009; (2) the Department of the Treasury's (Treasury) progress in creating an effective management structure, including hiring for the Office of Financial Stability (OFS), overseeing contractors, and establishing a comprehensive system of internal control; and (3) indicators of TARP's performance that could help Treasury decide whether to extend the program. GAO reviewed relevant documentation and met with officials from OFS, contractors, and financial regulators.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Treasury | As it enters the next phase of the program, Treasury will likely face ongoing challenges. Building on our prior recommendations aimed at improving Treasury's ability to effectively manage the next phase of the program, the Secretary of the Treasury should consider TARP in a broad market context and as part of determining whether to extend TARP, work with the Chairmen of the Federal Reserve and FDIC to develop a coordinated framework and analytical basis to determine whether an extension is needed. If it is, the Secretary should clearly spell out what the objectives and measures of any extended programs would be, along with anticipated costs and safeguards. |
In a follow-up report, GAO-10-531, we found that Treasury's decision to extend TARP was taken after significant deliberation and involved sufficient interagency coordination. Furthermore, Treasury officials identified four documents that were central to its efforts to describe and communicate to Congress and the public the framework it used to make decisions related to the extension of TARP. Treasury often directly or indirectly linked program decisions to a variety of quantitative indicators, including surveys, financial market prices and quantities, and measures of program utilization, among others. We also found that this framework was sufficient.
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| Department of the Treasury | As it enters the next phase of the program, Treasury will likely face ongoing challenges. Building on our prior recommendations aimed at improving Treasury's ability to effectively manage the next phase of the program, the Secretary of the Treasury should document its analytical decision-making process and clearly communicate the results to Congress and the American people for determining whether an extension is needed. |
Treasury officials identified four documents that were central to its efforts to describe and communicate to Congress and the public the framework it used to make decisions related to the extension of TARP. Treasury often directly or indirectly linked program decisions to a variety of quantitative indicators, including surveys, financial market prices and quantities, and measures of program utilization, among others. We found that this framework was sufficient.
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| Department of the Treasury | As it enters the next phase of the program, Treasury will likely face ongoing challenges. Building on our prior recommendations aimed at improving Treasury's ability to effectively manage the next phase of the program, the Secretary of the Treasury should update its projected use of funds and, if the program is extended, continue to re-evaluate them on a periodic basis. |
Based on our review of subsequent OFS reporting on projected use of funds, we found that as of November 9, 2009, OFS had updated its projected use of funds for all TARP programs. By updating estimates of expected uses of remaining TARP funds, OFS should be better able to plan for and more effectively execute the next steps of the TARP program.
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Topics
AccountabilityCommunicationContract oversightCreditDebtDecision makingEconomic stabilizationFederal aid programsFederal fundsFederal regulationsFederal reserve banksFinancial institutionsFinancial managementFunds managementInternal controlsInvestmentsLending institutionsMonitoringMortgage programsMortgage-backed securitiesNeeds assessmentProgram evaluationRisk managementStability operationsStrategic planningUS Treasury securitiesProgram managementCost estimatesProgram costsTransparencyPublic health emergencies