New COP on the Beat

Last Friday, the Congressional Oversight Panel (“COP”) released its second report on the management of the Troubled Asset Relief Program (“TARP”) by the U.S. Treasury.  The COP was recently established by the United States Congress to review the current state of financial markets and the regulatory system.  The COP is empowered to hold hearings, review official data, and write reports on actions taken by the U.S. Treasury and financial institutions and their effect on the economy.

Through regular reports, COP must:

  • Oversee Treasury’s actions
  • Assess the impact of spending to stabilize the economy
  • Evaluate market transparency,
  • Ensure effective foreclosure mitigation efforts
  • And guarantee that Treasury’s actions are in the best interest of the American people.

The report was scathing and highly critical of both the U.S. Treasury as well as U.S. financial institutions that are benefiting from TARP.  Below are two focus areas of the report and related comments.

Bank Accountability

The Panel still does not know what the banks are doing with taxpayer money. Treasury places substantial emphasis on the importance of restoring confidence in the marketplace. So long as investors and customers are uncertain about how taxpayer funds are being used, they question both the health and the sound management of all financial institutions. The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence.  

Transparency & Asset Evaluation

The bubble that caused the economic crisis has its foundations in toxic mortgage assets. Until asset valuation is more transparent and until the market is confident that the banks have written down bad loans and accurately priced their assets, efforts to restore stability and confidence in the financial system may fail.

Based on this report, it seems that the two main causes of the financial crisis – lack of accountability and lack of transparency – continue to plague our financial system.  Until these two issues are fully confronted and addressed at all levels, the crisis will continue unabated.   

COP

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About Wheelhouse Advisors
Wheelhouse Advisors LLC is the publisher of The ERM Current™, an online publication and blog dedicated to providing the latest updates on current trends in Enterprise Risk Management & Control. Wheelhouse Advisors provides cost-effective Enterprise Risk Management & Control solutions to both large and mid-size corporations. To learn more about Wheelhouse Advisors, please visit our web site at www.WheelhouseAdvisors.com.

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