Gaping holes in TARP, says COP

According to a story in today's Wall Street Journal, the Congressional Oversight Panel (COP) will issue a report today critical of the Troubled Relief Asset Plan's actions to date. TARP was designed by the Treasury Department to "protect and recapitalize our financial system as we work through the stresses in our credit markets." Today's report, says the Wall Street Journal, calls the bailout effort "mismanaged."

Mismanaged or not, TARP makes me realize that I want to recharter myself as a bank. For it's as a bank that you become a recipient of the TARP's outstanding generosity.

If you look at the organizations that have been granted money from TARP, you see familiar names like Etrade, Goldman Sachs, Capital One, Bank of New York, Northern Trust, Wells Fargo - you can find the list here.

I encourage you to check it out. The list of companies is a list of the money guys - the investment companies that paid out huge salaries to people who ran their companies into the ground last year. The economy collapsed and now these companies are apparently the sole focus of federally funded TARP payouts - which could reach nearly a trillion dollars.

The biggest concern COP continues to express is the lack of accountability for TARP funds. Here's what the the COP report has to say on this:

For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore. Finally, the recent loans extended by Treasury to the auto industry, with their detailed conditions affecting every aspect of the management of those businesses, highlights the absence of any such conditions in the vast majority of TARP transactions. EESA does not require recipients of TARP funds to make reports on the use of funds. However, it is within Treasury’s authority to make such reports a condition of receiving funding....

Detroit, apparently, needs to account for the money, but not Treasury Secretary Paulson's friends on Wall Street.

Another flaw of TARP, according to the report, is that the strategy expressed by Paulson for the funds is far more fluid than the banks being funded - it's a strategy that ebbs, flows and changes course depending the moment in time, like the tide.

Here's what the panel has to say about strategy:

The Panel’s initial concerns about the TARP have only grown, exacerbated by the shifting explanations of its purposes and the tools used by Treasury. It is not enough to say that the goal is the stabilization of the financial markets and the broader economy. That goal is widely accepted. The question is how the infusion of billions of dollars to an insurance conglomerate or a credit card company advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards....The need for Treasury to address these fundamental issues of strategy has only intensified since our last report.

So with less than two weeks to go before Bush passes the baton to Obama, we find our TARP is riddled with holes. The protection it was to provide is weak if you're a homeowner, a car company, a small business or a college student approaching graduation into the sickest economy since the 1930s.

But if you're a bank or insurance conglomerate, that's a whole different story. For financial institutions on Wall Street, TARP is sweet money that you don't even have to account for.

And so my New Year's resolution is to become a bank, so I can get me some of that federally sponsored protection too. It is, after all, my money.