Washington, DC - The House yesterday approved language authored by Congressman Maurice Hinchey (D-NY) that would require Treasury Secretary Timothy Geithner to either adopt a series of independent recommendations on ways to improve the Troubled Assets Relief Program (TARP) or publicly state why such recommendations are not necessary or appropriate.  The language, which Hinchey had inserted into the report accompanying the Financial Services Appropriations bill for fiscal year 2010, is part of the congressman's continuing effort to improve the government's massive financial bailout program.  Hinchey voted against the bill, but has since worked to improve the program.

"The massive bailout bill that Congress approved last year still lacks the proper safeguards and oversight provisions needed to ensure taxpayer money is not wasted or misdirected," Hinchey said. "It's unclear why Treasury Secretary Geithner has yet to implement the many good, reasonable steps on how to improve the TARP that were put forward by independent government oversight entities, but I am hopeful that this new provision will compel him to adopt those recommendations.  Every dollar matters and we cannot allow millions or billions of dollars to be wasted because easy common-sense safeguards were not adopted."

The language that Hinchey authored reads, "The [Appropriations] Committee directs the Secretary to report to the Committee by September 1, 2009 and on a quarterly basis for the next year, as to the Department's progress in implementing the various recommendations of GAO [Government Accountability Office], the SIGTARP [Special Inspector General for the Troubled Assets Relief Program], and the Congressional Oversight Panel in this area.  If the Secretary does not plan on implementing a specific recommendation by one of the three oversight bodies, the Secretary should certify to the Committee that such action is not necessary or appropriate and provide a justification for such notification."  The congressman noted that if Geithner announces he is not implementing the recommendations that his reasoning for not doing so will be closely examined and appropriate action will be taken.

Earlier this year, Hinchey led a group of 20 House and Senate members in urging Treasury Secretary Timothy Geithner to implement a series of recommendations set forth by the SIGTARP Neil Barofsky on how to increase accountability and transparency within the program.  Geithner has yet to respond to that letter or indicate that he will report to Congress, as required by law, about why he believes adopting the SIGTARP's recommendations are unnecessary.  The lack of a response led to Hinchey drafting the language that was included in the bill the House approved today.

Specifically, the House and Senate members expressed their concern over the Treasury Department's insistence that is too difficult to conduct oversight of how all the money distributed through the TARP program was spent by the financial institutions receiving such funds.  They noted that the SIGTARP's office collected information from all 364 TARP recipients that received funds prior to January 31, 2009 on how the funds were being used.  In fact, SIGTARP Barofsky noted in his recent report to Congress that the Treasury Department's claims that collecting such information was too difficult were "unfounded." 

Additionally, Hinchey and his colleagues urged Geithner to adopt SIGTARP Barofsky's recommendations for strict accountability standards within the Capital Assistance Program (CAP) -- the program that allocates funds to troubled financial institutions that receive capital as a result of "stress tests."  The House and Senate members also encouraged Geithner to embrace the SIGTARP's recommendations for the Public-Private Investment Program (PPIP) in order to prevent conflicts-of-interest, collusion, and money laundering that could result in the wasting of billions of taxpayer dollars through this unique program.

SIGTARP Neil Barofsky released his second Quarterly Report to Congress earlier this year, which included a series of recommendations on ways to strengthen the transparency and accountability of the TARP. Several recommendations in the SIGTARP's second Quarterly Report were also made in the Initial Report to Congress this year, but have not been carried out by the Department of Treasury.  In testimony earlier this year before the Joint Economic Committee about the importance of implementing adequate accountability and transparency provisions for the TARP, Barofsky made it clear that the consequences of inaction could threaten the success of economic recovery.