The government’s Troubled Asset Relief Program, established to stabilize weak financial institutions, faces challenges in getting repayments and in keeping the workers necessary to finish its work, according to a Government Accountability Office report.
President Bush started TARP in the 2008 financial crisis, allowing the U.S. Treasury to purchase or guarantee troubled assets held by financial institutions in an effort to strengthen the economy. The program has seen some success in stabilizing the financial system and restoring market confidence, while other challenges, like foreclosures and mortgage defaults, continue to linger.
Establishing TARP in a short time period presented staffing challenges. Over half of its 200 employees, including key management positions, are term appointments limited to 4 years. While some programs are ending, many have assets that must be managed, repaid and divested. Other active programs, like preserving homeownership and providing assistance to the American International Group (AIG), require ongoing attention.
Without a plan to address workforce issues, the management of TARP may find itself “unprepared to adequately manage and oversee the remaining TARP investments and programs,” GAO said.
Additionally, Treasury has not always exercised its authority when financial institutions miss interest payments. After missing six interest payments, the Treasury can restructure its assistance and appoint directors to the bank’s board. GAO said Treasury did not do this in seven cases.
FAST FACT: Under the Emergency Economic Stabilization Act of 2008, the GAO must update Congress on the performance of TARP every 60 days.
Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities.
- The Bureau of Alcohol, Tobacco, Firearms and Explosives’ National Response Team is not being used to its full extent by state and local law enforcement agencies. The team provides high—level expertise in investigations of arson and explosives incidents, but many agencies fail to take advantage of it. (OIG Department of Justice)
- Medicare and its beneficiaries could have saved $111 million just by buying generics. Drug manufacturers are required to report average sale prices of drugs to Medicare 30—days after the end of a financial quarter. Medicare uses this data to calculate the payment amount for the next quarter, presenting a time lapse of two financial quarters. When a generic hits the market, payments are still made to the manufacturer at the higher, brand-name price for two quarters or more. (OIG Department of Health and Human Services)