Monday, January 5, 2009

Treasury Responds to Congressional Oversight Panel

On December 30, the Treasury Department issued its responses to the ten questions posed by the Congressional Oversight Panel in their December 10th report. Treasury's responses to the questions, particularly Question 1, provide an interesting and useful summary of the programs and activities that have been implemented pursuant to the Emergency Economic Stabilization Act of 2008, such as the Money Market Investor Funding Facility (MMIFF), Commercial Paper Funding Facility (CPFF), Temporary Increase in Deposit Insurance, etc. Treasury's responses also provide the department's own assessment of the effectiveness of their activities thus far. The report says that these efforts have immediately stabilized the financial markets, but that factors well beyond the control of Treasury continue to impact the situation: "As long as confidence remains low, banks will remain cautious about extending credit, and consumers and businesses will remain cautious about taking on new loans."

The original questions surrounded the issue of whether Treasury has been pursuing a consistent and effective strategy with taxpayer money, and the uses thus far of the money that has been given to financial institutions. While the report vigorously defends the actions Treasury has taken, it also notes that: "Given the number and variety of financial stability actions being put in place by multiple entities, it will be challenging to view the impact of the Capital Purchase Program in isolation and at the institutional level."

The response document addresses the following questions, originally posed in a December 10, 2008 report by the Congressional Oversight Committee:

Question 1: What is Treasury’s strategy?

Question 1b: What specific facts changed that led to your change in strategy?

Question 2: Is the strategy working to stabilize markets?

Question 3: Is the strategy helping to reduce foreclosures?

Question 4: What have financial institutions done with the taxpayers’ money received so far?

Question 5: Is the public receiving a fair deal?

Question 6: What is Treasury doing to help the American family?

Question 7: Is Treasury imposing reforms on financial institutions that are taking taxpayer money?

Question 8: How is Treasury deciding which institutions receive the money?

Question 9: What is the scope of Treasury’s statutory authority?

Question 10: Is Treasury looking ahead?

The full text of the Treasury's December 30th response is available at: