The Government Accountability Office (the people who audit the federal government) is already saying that the oversight of the $700 billion bailout is failing. And we're only a couple of months into the massive money grab. In particular, the GAO is saying that the Treasury Department has no idea what it's doing or how to make this bailout successful. (Hint: It's not going to be successful.)
The major criticisms of how the Treasury is handling the bailout include:
Not having a system in place for verifying that banks receiving federal money are following the rules on executive compensation and dividends.
Not having even basic internal controls in place.
Inadequate staffing of the Office of Financial Stability, which was created to implement the bailout.
No decision by the Treasury on whether firms getting federal funds will have to provide reports on their use of the funds.
Does any of this come as a surprise? Most of it is not surprising, although I find it amazing that the government might just let banks take billions of dollars without reporting back on their use of the money.
This bailout might become the biggest financial failure of our government. It's already been reported that the taxpayers are on the hook for far more than the $700 billion. Try about $2.5 trillion and counting. And the Treasury... the people who are supposed to be looking out for the taxpayers... are asleep at the wheel and not even doing basic monitoring of the bailout. That doesn't make me feel very good.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.