The tug-of-war between the Treasury Department and the committee in charge of overseeing the bailout this year has been kind of fascinating to watch. The committee has been very critical of the administration, and rightfully so, mostly for their lack of transparency and the fact that they will exploit any loophole that will allow them to avoid having to run things by, say, Congress. Meanwhile, in his quarterly appearances in front of the five-member panel, the Treasury secretary, hunched and defensive, has been clearly chafing at having his every move followed by the committee.
You can kind of understand his frustration, too, given that in his mind he's got a patient open on the operating table, the situation is critical, and there's Neil Barofsky over his shoulder asking what this is, and that wasn't in the manual, and hey did someone sterilize the instruments? Meanwhile, committee head and Harvard professor Elizabeth Warren is everywhere from CNBC to Jon Stewart, telling the taxpayers in her dear, sweet, earnest way that she has no idea what the administration has done with their money, and how pissed they should be about it.
But now, just in time for the holidays, the two seem to be reaching a cautious peace. Today, the committee released a 134-page report in which they admit, in a backhanded way, that despite the crazy mutations the TARP went through and the "Treasury’s failure to articulate" these mutations, the program worked.
There is broad consensus that the TARP was an important part of a broader government strategy that stabilized the U.S. financial system by renewing the flow of credit and averting a more acute crisis. Although the government’s response to the crisis was at first haphazard and uncertain, it eventually proved decisive enough to stop the panic and restore market confidence.
In the executive summary of the report—which does not shy away, by the way, from detailing the various ways in which things have been and are still screwed up— Warren struck a conciliatory, and pointed note, stressing that despite their differences, the Treasury and the Committee have common goals.
Despite the difficult circumstances under which many decisions have been made, those decisions must be clearly explained to the American people, and the officials who make them must be held accountable for their actions. Transparency and accountability may be painful in the short run, but in the long run they will help restore market functions and earn the confidence of the American people.
Aw. We're glad everyone's getting along, especially since today Obama announced that TARP's being expanded, yet again, to extend credit to small businesses, which means they're going to be seeing a lot more of each other, starting tomorrow, when Geithner appears in front of the committee. If he's smart, he'll bring a batch of Christmas cookies.
Taking Stock: What Has the Troubled Asset Relief Program Achieved? [Congressional Oversight Panel]
Year-End Audit Finds TARP Program Effective [NYT]