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Panel has lots of questions for Treasury

Harvard Professor Elizabeth Warren

TEXT OF INTERVIEW

KAI RYSSDAL: Two-and-a-half months after they gave Henry Paulson $700 billion, lawmakers made it clear today they're having second thoughts. The occasion was a hearing of the House Financial Services Committee. Members gave assistant Treasury Secretary Neel Kashkari, the guy who's running the TARP, as it's known, a once over. Then they heard from their own team, the Congressional Oversight Panel for Economic Stabilization, the board Congress set up when they passed the bailout.

Harvard law professor Elizabeth Warren chairs the panel. Good to have you with us.

ELIZABETH WARREN: Thank you. It's good to be here.

RYSSDAL: Generally speaking, how satisfied is your panel with what the Treasury Department has been doing?

WARREN: Not satisfied.

RYSSDAL: Well, what should they be doing better, then?

WARREN: Well, what we're going to start with is a lot of questions. We have questions about what's going on here. Does the Treasury really have a strategy? Is the strategy working? Is it helping reduce foreclosures? How's the taxpayer money being used? What's the Treasury doing to help American families and small businesses? Until we get some real answers we can't be satisfied. I mean, this is a lot of money.

RYSSDAL: What's the biggest problem, would you say?

WARREN: The biggest problem as I see it now is there's no coherent strategy. It's not possible to see Here's what we're going to do. Here's how we're going to get the economy back on its feet. Right now the strategy seems to be we'll stuff some money into banks and let the banks put it in their vaults, and that's somehow going to make the economy do OK. And I don't think that's right.

RYSSDAL: How big a deal do you think it is that the Secretary of the Treasury Henry Paulson has effectively changed his mind a couple of times about what he's going to do with this money?

WARREN: Well, given that Treasury told us the principle goal here was confidence, I have to say I don't think that was confidence inspiring. Particularly because there was no identification of either specific facts that had changed, nor was there any articulation of, Well, the reason we're not going over here and going over there is because we have this better idea.

RYSSDAL: Well, then, what should the Treasury Department be doing? If your panel could write the rules, what would you have them do?

WARREN: Right now what we would have them do is we'd just have them answer the questions that we've asked. And if Treasury starts by answering those questions then we'll be a lot further down the road, both to understanding what they have in mind and being able to evaluate whether or not the money is being spent in the right way.

RYSSDAL: How should this TARP be working?

WARREN: There has to be an overall notion that we're going to deal with the genuine economic problems in the United States right now. So, for example, we're having a problem -- a real, visible problem -- in the housing market right now. And we've got, potentially, $700 billion commitment of American dollars out there for which, right now, it's not being used. There's not even a hint that it's going to be used to address any part of that problem. That tells me there's not a coherent strategy here. You know, if the American family fails, then there won't be any banks to save. This isn't about saving banks individually. Ultimately, this is about saving our economy, saving our country. But most of all, saving our people.

RYSSDAL: Elizabeth Warren chairs the Congressional Oversight panel for the Treasury Department's TARP program. She's got a day job, too. She's a professor of law at Harvard University. Professor Warren, thanks so much for your time.

WARREN: Oh, thank you.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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