The GAO is out with its first report on the Treasury’s TARP/CPP program. Implementing the transparency and accountability requirements should be a high priority for the new administration.
(Also, be sure to check out the nifty TED spread chart on page 50, and the bond-treasury spread on 51. And, if you want to scare yourself, the foreclosure chart on page 55.
Through the capital purchase program (CPP)–a preferred stock and warrant purchase program–Treasury provided more than $150 billion in capital to 52 institutions as of November 25, 2008. GAO recognizes that TARP has existed for less than 60 days and that a new program of such magnitude faces many challenges, especially in this current uncertain economic climate. However, Treasury has yet to address a number of critical issues, including determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation and dividend payments. Moreover, further actions are needed to formalize transition planning efforts and establish an effective management structure and an essential system of internal control.