TARP's Lack of Transparency

Yesterday, Neil Barofsky, the special investigator general for the Troubled Asset Relief Program (TARP), testified before congress about the status of the program. A couple of points were particularly troubling.

First, the potential liability of the TARP program is much higher than originally anticipated. Congress has authorized $643 billion for TARP (of which only $441 billion has been spent). But when you add in the liability assumed for the "toxic assets," the total taxpayer liability for the program in a worst case scenario is $23.7 TRILLION. Pretty scary.

Second, Mr. Barofsky complained that his recommendations for providing transparency for TARP are being ignored. Four of these ignored recommendations are:

• Require TARP money recipients to report on what the money was actually used for.
• Treasury should report regularly on the value of its portfolio of TARP assets
• Disclose the identity of defaulting TARP borrowers
• Disclose all trading activity of TARP assets.

These suggestions seem quite reasonable if the government is serious about transparency. Perhaps it is not as serious as it claims.