Amit R. Paley, Washington Post, November 13, 2008
"The Bush administration has committed $290 billion of the $700 billion rescue package. Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.
"'It's a mess,' said Eric M. Thorson, the Treasury Department's inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. 'I don't think anyone understands right now how we're going to do proper oversight of this thing.'"
Amit R. Paley, Washington Post, November 10, 2008
"The financial world was fixated on Capitol Hill as Congress battled over the Bush administration's request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention.
"But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
"The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal. But they have worried that saying so publicly could unravel several recent bank mergers made possible by the change and send the economy into an even deeper tailspin."
Treasury to Review New Tax Break Plan, New York Times, November 19 Schumer Questions IRS Rule Aiding Wells-Wachovia, Reuters, October 30
Obscure Tax Breaks Increase Cost of Financial Rescue, Wall Street Journal, October 18
After Change in Tax Law, Wells Fargo Swoops In, Washington Post, October 4
Mark Landler, New York Times, October 21, 2008
"In a step that could accelerate a shakeout of the nation's banks, the Treasury Department hopes to spur a new round of mergers by steering some of the money in its $250 billion rescue package to banks that are willing to buy weaker rivals, according to government officials.
"As the Treasury embarks on its unprecedented recapitalization, it is becoming clear that the government wants not only to stabilize the industry, but also to reshape it. Two senior officials said the selection criteria would include banks that need more capital to finance acquisitions.
"'Treasury doesn't want to prop up weak banks,' said an official who spoke on condition of anonymity, because of the sensitivity of the matter. 'One purpose of this plan is to drive consolidation.'"
Mark Landler and Edmund L. Andrews, New York Times, October 4, 2008
"Treasury officials do not plan to manage the mortgage assets on their own. Instead, they will outsource nearly all of the work to professionals, who will oversee huge portfolios of bonds and other securities for a management fee....
"The selected asset management firms will receive a chunk of the $250 billion that Congress is allowing the Treasury to spend in the first phase of the bailout. Those firms will receive fees that are likely to be lower than the industry standard of 1 percent of assets, or $1 for every $100 under management....
"Using outside contractors on such an extensive scale raises a host of thorny questions, outside experts said. Among the most pressing is: How will the Treasury avoid conflicts of interest that fund managers will encounter as they work both for their own clients’ interests — which could pay higher fees — and the interests of taxpayers?
"'With anyone short of the stature and honesty of a Paul Volcker running it, you need to worry a lot about conflicts of interest,' said Alan S. Blinder, a former vice chairman of the Federal Reserve, referring to its former head. 'Unfortunately, there just aren’t many people with the expertise you need but without any possible conflicts.'"
Treasury to dole out no-bid contracts due to "compelling urgency" of the crisis