A government working, as President Abraham Lincoln said, “by the people, for the people,” is part of what has always made our nation unique.
As such, Americans want and deserve to know how their taxes are spent. Whether Congress spends one dollar or $1 trillion of taxpayer money, Americans expect transparency and openness in government.
Right now, with the Federal government spending at unprecedented levels in an attempt to address economic concerns, the need for greater transparency and oversight is paramount, especially when the financial security of our nation is at stake.
Late last year, the U.S. entered into a financial crisis unlike anything we have seen since the Great Depression. If Congress had failed to act, economists predicted credit markets would have seized and economic activity would have ground to a halt, putting our nation into further peril.
Right now, with the Federal government spending at unprecedented levels in an attempt to address economic concerns, the need for greater transparency and oversight is paramount…
In response, Congress authorized $700 billion for the Troubled Asset Relief Program, or TARP. Congress intended this authority to be used to purchase toxic assets and mortgage-backed securities. Although a catastrophic meltdown of our nation’s financial markets was averted, the haste in which the program was created left voids in oversight and minimal control over how the funds are spent.
After the program was created, TARP was expanded by the Department of the Treasury to include 12 separate programs involving government and private funds of up to almost $3 trillion – roughly the equivalent of last year’s entire Federal budget. From large capital infusions into hundreds of financial institutions, to a program designed to modify millions of mortgages, to public-private partnerships purchasing toxic assets from banks using tremendous leverage provided by government loans or guarantees, TARP has evolved into a program of unprecedented scope, scale, and complexity. As a result, the Federal government has struggled to keep track of how Treasury funds have been spent.
Currently, the Treasury Department lacks a data-driven, transparent process for reporting when funds are infused into TARP entities and whether they have been used and performed as intended. There are reports being filed, but in many cases they contain redundancies and inconsistencies.
Some have argued that analysis can be performed with the reports already being provided to Congress; however, almost all analyses performed to date have been collected through survey responses and audits. Surveys are self-reported responses to fixed information in fixed periods of time. Unfortunately, they occur after the funds have been spent; making it difficult to ensure proper accountability.
The TARP’s special inspector general recently released a report based on surveys collected from more than 300 TARP recipients. The report contained specific information about how TARP recipients are using the federal aid. Of the banks surveyed for the report, 110 have used the funds for investment, 52 used it for debt repayment, and 15 used it to purchase other banks. While this report is a good first step toward greater transparency, it is only a snapshot of an issue that requires constant monitoring and analysis.
In an effort to provide greater oversight of the use of TARP funds, I have joined with Senators Mark Warner (D-VA), Sherrod Brown (D-OH), and Sam Brownback (R-KS) to bring better transparency to the program. Our effort, introduced as the TARP Transparency Act, has earned the support of fiscal advocacy groups such as Citizens Against Government Waste, Americans for Tax Reform, and the Center for Fiscal Responsibility.
If approved by Congress, the law would direct the Treasury Department to collect all TARP data in a readily usable fashion to make it transparent and traceable. Detailed information on TARP expenditures and the actions of TARP fund recipients would be made available through a single database in a standardized format. The information would be collected and disseminated in near real-time to help present a clear picture of how and where the money is being used.
Every American has a right to know how the more than $700 billion authorized through TARP has been used.
Large, complex government programs such as TARP can often be the source of misspent taxpayer dollars. Every American has a right to know how the more than $700 billion authorized through TARP has been used. Congress cannot be a good steward of the public trust if it has limited access to essential details of the TARP.
Transparency in government is healthy for our democracy. Americans expect it, and Congress has an obligation to provide it.
Mel Martinez is a U.S. Senator for Florida, a member of the Senate Banking Committee and former Secretary of the U.S. Department of Housing and Urban Development.