Bailout Accountability Slow, Overwhelming

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Six weeks and billions of dollar later have not shown much of a return on the U.S. Treasury's investment in the U.S. economy.

Market watchers point to instability on Wall Street and around the world. They are concluding the $700 billion Troubled Asset Repair Program (TARP) isn't the quick fix politicians and businesses had hoped it would be.

Watchgroups say that what is lacking is oversight. It's a startling fact that seems to add insult to injury, considering the taxpayer outcry over the bailout that many believed would benefit corporate America more than "Main Street."

Eric M. Thorson is the U.S. Treasury Department's Inspector General and temporary overseer of the rescue plan.

"It's a mess," said Thorson. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

So just how did this "mess" happen?

"It wasn't supposed to happen," said CBN News Financial Editor Drew Parkhill.

"Congress established some oversight posts when it approved the bailout to avoid waste and corruption," Parkhill explained. "But those posts haven't been filled yet . Eric Thorson has been filling in until the special IG position for oversight is filled."

He added, "Doubtless, overseeing something so big is very complex. And seriously,  this is a government operation, who can be surprised that things are moving slowly?"

Reports indicate, however, the distribution of the funds isn't going as slow. Already roughly $290 billion of the rescue plan has been funneled into the nation's largest banks.

But with little to no oversight, questions linger as to whether a complete and thorough accounting is even possible.

"Eventually, there will likely be an overall accounting done of where the money went, so we should (hopefully) have a pretty good idea. It's probably not unusual for these things to start slowly," Parkhill said.

Bait and Switch?

Meanwhile, Treasury Secretary Henry Paulson has announced a change in plans for the rescue package.

Originally the plan was to buy up bad loans. But Wednesday Paulson announced he wants to focus instead on shoring up consumer financing.

Now he is being accused of pulling a 'bait and switch.'

"Paulson's credibility has certainly been substantially diminished,'' said Peter Wallison, who served as General Counsel at the Treasury during Ronald Reagan's administration.

"There has been a lot of shifting back and forth and he clearly hasn't thought through much of these policies," Wallison continued. "He has lost a lot of confidence from the market from all of this.''

But Parkhill is more generous in his assessment of the move, saying, "It's probably not so much bait and switch as it is seeing that the original idea just wasn't going to work, so they're trying something different."

"It may be that they didn't think the original idea through well enough, or maybe new evidence convinced them they needed to try something else," Parkhill said. "It may be a good thing they've given up on a bad idea, and instead they're going to try something that hopefully will work better.

A Bailout for the Auto Industry?

As many cry foul over the sudden change in direction, a struggling auto industry  is now hoping for a helping hand from Uncle Sam.

But Paulson says the rescue package was never designed with the auto industry in mind.

"The intent of the TARP was to deal with financial institutions and major systemic issues and getting lending going," Paulson said. Still, he believes Congress should come to the aid of the floundering industry.

"Congress, I believe, should address the question of the auto industry. I encourage Congress to come up with a pot, to get money, to deal with this issue. And again, I don't think that bankruptcy (for U.S. automakers) is a good thing," he said. But is government being an enabler by bailing out yet another industry?

"That's an excellent question, and it's one many people are asking," Parkhill said.

"Numerous industries could make a case (homebuilders, for instance). And it brings up the question of "moral hazard" - ie, if government bails you out of bad decisions, then, why not keep making bad decisions? Risk (possible loss of your money, or even your business) is taken out of the equation if government will always be there, so go ahead and do whatever you want," Parkhill elaborated.

Christian financial advisor Dave Ramsey seems to agree. He believes that the take-away from the current financial crisis is never look to government as one's savior.

"I think we're taught that God is to be our source. We've really got to stop looking to Washington to fix our problems. It obviously doesn't have the ability to do that," Ramsey said.

Sources: CBN News, The Huffington Post,, Bloomberg News, Reuters, Christianity Today

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CBN News
Crystal Woodall

Crystal Woodall

CBN News is a national/international, nonprofit news organization that provides programming by cable, satellite, and the Internet, 24-hours a day. Follow us on Facebook, Twitter, and Google+.