The $700 billion bank bailout is now one year old, but the federal government is still keeping many details secret from taxpayers.
The rescue program, initiated by then-Treasury Secretary Henry Paulson as Wall Street collapsed, should be operated under strict standards of transparency. That's the only way taxpayers can assess its impact.
Many economists believe the Troubled Asset Relief Program did help to prevent a total meltdown in financial markets. Investor confidence in U.S. capital markets appears to have stabilized. Beyond that, however, banks are still failing, the unemployment rate is high, and an economic recovery is still elusive.
How the TARP money has been spent, and whether it's being repaid, are still largely mysteries.
Neil Barofsky, special inspector general of TARP, told Congress that the Treasury Department's "attitude towards transparency ... remains a significant frustration." The Obama administration needs to be reminded that taxpayers footed the bill for this massive bailout, and they are entitled to know where the money went.
An accurate picture of the TARP program is needed especially because the money wasn't spent for the purpose for which Paulson initially sold it to Congress. It was to be used to clear banks' troubled assets off their balance sheets.
Instead, the money was spent as a direct capital infusion for banks to spur lending, and to bail out other "too big to fail" firms such as AIG. There's still $45 billion or so that AIG must repay, but no clear answer on when or how it will do so.
The toxic assets still remain on banks' ledgers, continuing to imperil those institutions. Plus, the industry is more concentrated, raising the concern that there are even more banks that would fall into the category of "too big to fail" if another crisis hit.
Treasury officials should take steps to make the bailout programs more transparent and accountable. First, it should require recipients of TARP funds to disclose what they did with the government aid.
It wouldn't be a hardship for bailout firms to inform the public whether they used the money to increase lending, purchase other banks, provide a cushion against further losses, etc. More than 600 banks are still relying on the injection of capital.
Also, Treasury should disclose the status of taxpayers' investments in the bailed-out firms. Which banks are repaying their obligations, and how much has been repaid? Congressional Democrats claim 30 percent of the funds have been repaid.
Great; let's see the proof.
The government could also post more information online, in real time, about disbursement of TARP funds.
Treasury is just beginning to launch a program to entice private investors to purchase troubled assets from banks. It would be supported with $75 billion from TARP, and should also be operated under the highest level of disclosure.
And when officials at Treasury get with this program of openness, they should work on their colleagues at the Federal Reserve, who still won't disclose some basic information, such as the names of firms that received emergency loans.