December 10,2009

Grassley says Treasury has obligation to track and disclose how TARP dollars are used

WASHINGTON --- Senator Chuck Grassley said the Treasury Department has finally agreed to a recommendation from the Special Inspector General for the Troubled Asset Relief Program (TARP) that it report on use of TARP funds by individual TARP recipients, and that what already has been revealed, thanks to the work of the Special Inspector General for the program, validates grassroots skepticism and anger regarding the way bailout dollars have been used.

“There shouldn’t even be a question about whether the Treasury Department would report on how the $700 billion taxpayer-sponsored bailout was being used by those who got the money,” Grassley said. “But it didn’t and, in fact, the Treasury Secretary resisted the recommendation to do so until now. So this long-sought commitment to public reporting is a good development, all things considered, and the dedicated effort of the Special Inspector General has immediately shown what sunshine can reveal and why exposure is necessary.”

An audit released today by the Special Inspector General demonstrated conclusively that use-of-funds reporting is feasible and useful, and said that the Treasury Department has agreed to obtain and to report to the public “qualitative responses from each TARP recipient on their use of TARP funds, backed by quantitative data obtained from the recipients’ regulators and Treasury’s own analysis.”

The audit also reported that two large insurance companies, The Hartford Financial Services Group, Inc. and Lincoln National Corporation, received more than $4.3 billion in TARP funding through the Capital Purchase Program, even though the Capital Purchase Program was designed to stabilize financial institutions and stimulate lending by those companies that provide credit to American consumers and business. The Special Inspector General’s report said that neither insurance company initially qualified for TARP funds under the Capital Purchase Program, so they both purchased small thrift/savings and loan companies in order to technically qualify. Furthermore, all of the $4.3 billion in TARP funds received was used in their respective insurance businesses, and none was used by their thrift subsidiaries to extend credit to consumers or businesses. The Special Inspector General said this was inconsistent with the spirit and intent of the Capital Purchase Program.

Last month, Grassley called on Treasury Secretary Timothy Geithner to adopt the transparency recommendation, which had been ignored since it was first made by the Special Inspector General in December 2008. The text of the letter Grassley sent to Geithner is included in the news release below.