WELL OF COURSE WE OVERPAID

Since value was zero!
Watchdog: Treasury Overpaying for Bank Investments
The three government watchdogs overseeing the $700 billion financial rescue package continued to criticize the Treasury Department’s implementation of the plan, suggesting a lack of a strategic vision and raising the concern that Treasury is overpaying for its investments in banks.

Representatives from the Government Accountability Office, a congressional oversight panel and a special investigator general said the Treasury continues to face challenges on both general and practical levels. The transparency and accountability surrounding the Troubled Asset Relief Program, or TARP, continue to fall short, leaving taxpayers and policymakers short of information on the program.

“Our money — and our economy — are on the line, and we all have a stake in the outcome,” said Harvard Law School professor Elizabeth Warren in her prepared remarks for a Senate Banking Committee hearing.

Warren heads the five-member congressional oversight panel overseeing the TARP, and said that the group on Friday will issue a report suggesting Treasury has significantly overpaid for the assets it has purchased from financial institutions. She said an analysis of 10 of the TARP transactions, when extrapolated for all of the purchases made in 2008, suggests Treasury paid $254 billion for assets worth approximately $176 billion, a shortfall of $78 billion.

“Treasury paid substantially more for the assets it purchased under the TARP than their then-current market value,” Warren said.

Her comments echoed those in a report issued Thursday by TARP Inspector General Neil Barofsky, which questioned the Treasury’s accounting for TARP investments. Barofsky, in his testimony for Thursday’s hearings, said the long-term success of the financial rescue plan isn’t assured, and that the Treasury continues to fall short on explaining how the program is being implemented. (Read the report)

“The most significant failing from a transparency standpoint: understanding the process and criteria Treasury used to decide who would receive TARP funds and what the recipients have done with the hundreds of billions of dollars that have been invested,” Barofsky said.

He added that his office is opening an audit of how Bank of America Corp. received $45 billion of government funds in two installments, as well as how lobbyists are influencing the application process for banks to receive capital infusions. –Michael R. Crittenden