Treasury Lost $78 Billion Due to Overpayment of TARP Funds, Panel Says

Obama has been facing a slew of problems in his early days of presidency. The latest problem is the inaccurate valuation of bank assets by the Treasury as part of the $700 billion TARP (Troubled Asset Relief Program) bailout package enacted in 2008 under Bush.

According to the testimony of Harvard Professor Elizabeth Warren, who is chairing the Congressional Oversight Panel for TARP, Treasury doled out $254 billion for bank assets worth only $176 billion - an overpayment of $78 billion of taxpayer funds. She has also noted that Treasury has not cited any reason for the overpayment. According to the Congressional Budget Office's independent estimate released a month ago, Treasury overpaid $64 billion.

These reports add another dimension to the American taxpayer's woes. Until this time, we feared only misuse by Wall Street with the likes of John Thain (former head of Merrill Lynch) freely handing out billions of dollars in bonuses in 2008 despite registering massive losses. Now we have to be seriously concerned with the standards of the Treasury.

Since late 2008, the Treasury has provided funds to over 350 banks primarily to facilitate lending and to ease the credit crunch. But transparency is lacking in how Treasury decided which banks were worthy recipients, how much they should have received and how Treasury ensures that the banks are accountable for the funds.

Wells Fargo which received $25 billion in capital infusion cancelled an expensive employee junket in Las Vegas after media scrutiny. AIG came under severe criticism for spending over $400,000 on executive spas soon after receiving $85 billion of TARP funds. Citigroup which received $45 billion, ordered an expensive new luxury jet but cancelled the purchase when questioned. Thankfully, the fear media hounding has kept some of the Wall Street excesses under check.

Such is the state of affairs of our tax dollars. Now the Treasury's trustworthiness looks questionable with billions already overspent. According to WSJ, TARP Inspector General Neil Barofsky has reported that his office would investigate how lobbyists influenced the funding process through the Treasury and also audit Bank of America. Naturally, we expect new skeletons to tumble out of the treasury's cupboard.

Sources: http://www.associatedcontent.com/article/1425579/american_taxpayers_beware_of_the_35000.html?cat=62; http://blogs.wsj.com/obama-100-days/