Lawmakers: Technology Is Needed to Monitor US Bailout
The U.S. government needs to embrace new technology to provide missing oversight of a huge bailout of the U.S. financial industry, several lawmakers and tech vendors said Thursday.
The U.S. government is doing very little to track the spending and repayments under the Troubled Asset Relief Program (TARP), which allows the U.S. Department of Treasury to prop up banks and to purchase or insure up to US$700 billion of mortgages and other "troubled" loans, said Representative Stephen Lynch, a Massachusetts Democrat.
"We have to figure out a way that we can provide transparency and accountability to the American taxpayer," Lynch said during a hearing before the House Financial Services Committee's Subcommittee on Oversight and Investigations. "We put out $700 billion in taxpayer funds to bail out the banks, and if that weren't maddening enough, we've had a very, very, very difficult time tracking where the money went, what it was spent for, and whether or not the program was abused or used correctly."
Critics of TARP, approved by Congress in late 2008 to stabilize the U.S. economy, say many banks aren't using the money to provide loans as intended, instead using it for other purposes, including executive salaries and the acquisitions of smaller banks. Critics have also questioned whether the program has been effective and whether Congress has a way to measure the effectiveness.
Several witnesses at the hearing called for better tracking of the TARP funds and offered support for House Resolution 1242, which would amend the TARP program by requiring the Treasury Department to create a huge database tracking TARP funding. The database would use existing public and private sources to track the program and provide "ongoing, continuous, and close to real-time updates" of the status of TARP funds.
Information about TARP funding is collected by 25 U.S. government agencies, said Representative Carolyn Maloney, a New York Democrat and sponsor of H.R. 1242. A central database would allow better oversight of the program, she said.
TARP was hastily passed in late 2008, and while the U.S. economy is showing signs of improvement, the situation is still "fragile," said Thomas Quaadman, executive director for financial reporting policy at the U.S. Chamber of Commerce.
"As with any government program, there needs to be accountability for taxpayer dollars," he added. "Simply put, the American people have a right to know how and where their hard-earned money is being spent."
Representatives of four tech vendors told the subcommittee that the technology exists to track and analyze the TARP funds. Congress should also require technologies that use predictive analysis to determine what TARP funding is likely itself to become troubled, said Dilip Krishna, vice president for financial services and insurance at Teradata, a data-warehousing and business intelligence vendor.
Predictive analysis would have value, but simple tracking of funding would be a good start, Lynch said. "I must confess that I would be happy with a system that just tells me where the money went," he said. "I would be happy if we came up with a system that ... at least put people on notice that the government is watching and we're getting information in a useable fashion."
Ari Schwartz, vice president and chief operating officer of the Center for Democracy and Technology, urged lawmakers to require that the TARP database required in H.R. 1242 be accessible from the Web. A Web interface would allow journalists, watchdog groups and private residents to monitor TARP funding, he said.