Lawmakers on the Hill are not happy with the Treasury Department’s execution of the $700 billion financial industry bailout plan after the first comprehensive report on the rescue package found more oversight was needed. Shocker! The report was released yesterday. Today, House Republicans warned Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke today that without greater accountability, Congress will be reluctant to release to the Treasury the second half of the $700 billion. Minority Leader John Boehner led 12 House Republicans in writing to Paulson and Bernanke that:

“The government has burned through nearly $350 billion of (bailout) funds and is pledging trillions of dollars more through other programs, yet little is understood about how these investments are contributing to the nation’s economic recovery,”

The Government Accountability Office said Tuesday that the Treasury Department has no mechanism to ensure that banking institutions limit their top executives’ pay and comply with other restrictions. What did they expect? The deal was slapped together and pesky details like oversight were left for later.

The auditors acknowledged that the Troubled Asset Relief Program (TARP) was less than 60 days old and has been adjusting to an “evolving mission”. But they recommend that the Treasury work with government bank regulators to determine whether the activities of financial institutions that receive the money are meeting restrictions on executive pay, dividend payments and repurchasing of shares.

No surprise that boy-wonder Neel Kashkari, the new head of the Treasury Department’s Office of Financial Stability, said the agency was developing its own compliance program and indicated that it disagreed that it needed to work with regulators. How dare lawmakers question a Goldman Sachs whiz kid? Boehner did. The GOP letter continued, saying

“The seemingly ad hoc implementation of TARP has led many to wonder if uncertainty is being added to markets at precisely the time when they are desperately seeking a sense of direction.”

The letter requested what the government’s exit strategy would be from it’s “sweeping involvement in private business.” They also demanded that Paulson and Bernanke explain what they intend to do with the second $350 billion “for maximizing its effectiveness” and wanted much more information about government loans, the risks associated with the loans and expectations for repayment. As I’m writing, Paulson’s proposed a “Plan C”, which is basically his “Plan A”- that the government buy up mortgages and fix them at under 5%. Meanwhile, the banks have SKATED with 10 times more than the Big 3 automakers are begging for, and Paulson hasn’t spent a DIME on buying any assets.

Even House Financial Services Committee Chairman Barney Frank is feeling the heat, after years of allowing Fannie and Freddie to be used like giant ATMs. Frank said that Treasury’s response comes

“very close to telling the institutions that they will be free to use the funds as they wish. The bad news was confirmation by the GAO in its first report about the program that Treasury has no way to measure whether taxpayer funds invested in banks are being used in accordance with the purpose of the law to increase lending. The much worse news is Treasury’s response that it does not even have the intention of doing so.”

Not unless you make them, congressmen. BEFORE you hand over any more of our money. What you’re seeing is business-as-usual, only with a lot more zeros to play with. Taxpayers of all political persuasions have quickly figured out they are getting screwed at lightning speed. Trouble is, WE can’t throw Paulson out, and who knows if Obama’s pick Geithner will be any better. At this rate, he won’t have any bucks to burn.

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