I misplaced $350 Billion, can you help me find it?

According to a report of the Congressional Oversight Panel for Hank Paulson’s TARP program no one knows where the money has gone. Poof!

Congress takes a look and sees that no one knows what the banks are doing with the money, the US Treasury primarily gave $350 Billion to “healthy banks”, has done nothing about foreclosures contra to the intent of Congress, and appears to have no strategy about what  it is doing.

Calculated Risk suggests one place the TARP money is going … while others suggest its being used to pay bonuses to executives who drove their firms into the ground TARP.

Quotes from the report:

Bank Accountability: The Panel still does not know what the banks are doing with taxpayer money. Treasury places substantial emphasis in its December 30 letter on the importance of restoring confidence in the marketplace. So long as investors and customers are uncertain about how taxpayer funds are being used, they question both the health and the sound management of all financial institutions.

Transparency: The confidence that Treasury seeks can be restored only when information is completely transparent and reliable. Currently, Treasury’s strategy appears to involve allocating the majority of the $700 billion to “healthy banks,” banks that have been assessed by their regulators as viable without federal assistance.

Foreclosures: While the statute contemplates that foreclosure mitigation would be accomplished through the purchase of mortgage-related assets, many believe that Treasury has clear authority to use a portion of the $700 billion to address mortgage foreclosures in other ways. For Treasury to take no steps to use any
of this money to alleviate the foreclosure crisis raises questions about whether Treasury has complied with Congress’s intent that Treasury develop a “plan that seeks to maximize assistance for homeowners.”

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.