Why Should We be Surprised? (Yves Smith)

We noticed the article in today’s NY Times that the GAO will be releasing the first audit of the TARP program. Here is what Yves Smith of Naked Capitalism has to say about it:

The New York Times reports that the General Accounting Office is readying to issue a report that will criticize how Treasury has handled its spending under the $700 billion TARP program. The main shortcomings are failure to track how the money is actually being used and inadequate controls to prevent conflicts of interest.

Gee, I thought of those supposed failings as features rather than bugs.

Here’s what the Times had to say:

The first operational audit of the $700 billion financial rescue plan, to be delivered to Congress next Tuesday, is expected to be critical of the Treasury Department’s failure to set up ways to track how its bailout money is being used in the marketplace, according to people briefed on a draft of the report.

The audit, done by the Government Accountability Office, is also likely to call for tighter controls over the conflicts of interest that are arising as financial specialists, institutions and law firms are hired for Treasury work that could later aid their private-sector clients, said these people, who would speak only on condition of anonymity because the briefings were confidential.

But the overall assessment was “a mixed bag,” as one person put it. It was clear, he said, that the auditors took into account how quickly the program was carried out, how much its focus shifted over time and how little feedback Treasury has had from oversight agencies so far.

Read the rest of the article.

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