Congressional Panel Is Worried About Misuse of Funds Meant for Foreclosure Prevention
January 13th, 2009
Obama has already set his team ready to focus on foreclosure prevention measures giving hope to many that something concrete is going to be done. Meanwhile the Congressional panel is worried and concerned about misuse of funds meant for foreclosure prevention.
Half the funds allotted for TARP has been released but the Congressional Oversight Panel viewing what the banks are doing with the taxpayer’s money is not satisfied and questions are being raised. In a second report the panel stated that the banks that had taken the money “did not provide complete answers to several of the questions and failed to address a number of questions at all.”
It was stated that not one of the banks was agreeable to disclose how they were spending the billions they had got from the federal sanction. It led to a statement that “For the Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore.” Elizabeth Warren, a law professor from Harvard said she is very happy that the new administration is focusing on this vital issue. She added that the Treasury “didn’t put any tracking mechanism on it. They didn’t tell the banks what they had to do in order to get the money. It might be used for lending, it might be used to buy other banks … it might just be stuffed in vaults and left there. I think that Congress may want to take a very hard look at that question. Ultimately, we don’t have a badge, don’t have a gun. It’s up to Congress.” According to her at the core of the problem is the housing boom and the mess of foreclosures. Hence that is from where the solution should get started.
The report by the panel stressed on the point that it is “essential” to get better responses from the banks on these vital questions. It said that the previous responses of the Treasury are unsatisfactory.
It has been questioned why the Treasury has expected Citigroup but not other similar institutions who also got money, to modify the loans. It noted, “Treasury’s refusal to answer this question is one of the most troubling aspects of their letter. The panel intends to do more fact finding on this matter.” The no-response attitude of the treasury has been repeatedly stressed. The panel is reluctant to take the assurances of the Treasury at its face value and wants more specific replies.
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