Report: TARP favors private investors
U.S. Secretary of the Treasury Timothy Geithner testifies during a hearing before the House Financial Services Committee on Capitol Hill in Washington, D.C. about regulating the financial system.
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Steve Chiotakis: Treasury Secretary Tim Geithner may need a suit of armor to
repel the political posturing and economic earful he's likely to get on Capitol Hill today. The guy's not only been criticized for having trouble getting his full team at Treasury in place, or not responding quickly enough to the AIG bailout bonus debacle. He's also got this critical watchdog report out this morning on the Troubled Asset Relief Program. It says his department needs to do a better job of tracking how banks are using TARP money. Here's Ashley Milne-Tyte.
Ashley Milne-Tyte: The government's plan is to get the private sector to buy troubled mortgage-backed securities, backed by a big government guarantee. But the TARP's inspector general, Neil Barofsky, says right now, private investors are getting so many incentives to take part, there's plenty of potential for mistakes, even scams.
Edward Hadas is with Breakingviews.com:
Edward Hadas: When the government is dangling so much money in front of you, it's very tempting to move quickly and not really pay very much attention to what you're doing. And you may sell it to people who don't really have the money to buy, um, or fraudsters or one sort of another, or who have laundered money.
The inspector general is recommending that Treasury set conflict of interest rules so those managing the assets don't benefit at taxpayer expense. His office has already begun criminal investigations into securities fraud related to the bailout.
I'm Ashley Milne-Tyte for Marketplace.