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The TARP Oversight Panel's Mandate

By Anonymous

Comparing the way the Elizabeth Warren-led TARP Oversight Panel describes its mandate with the Panel's actual mandate (see Section 125) is incredibly telling.

(For the record, I like Elizabeth Warren. I think she's a great consumer advocate. But there's a time and place for advocacy. When she was named to the Oversight Panel, she became a public servant. The Panel's first report was a thoroughly political hit piece. Warren is supposed to be a straight shooter, but instead she used her platform as a public servant to push her own agenda.)

The Panel is required to submit regular reports to Congress on specific aspects of TARP, but the Panel has conveniently changed the topics that its reports are supposed to address. Here's a side-by-side comparison of the topics the Panel claims its reports are supposed to address, and the topics the legislation actually directs the Panel to address (with my commentary interspersed):

Oversight Panel: "Oversee Treasury?s actions."

Legislation: "The use by the Secretary of authority under this Act, including with respect to the use of contracting authority and administration of the program."

This one is OK.

Panel: "Assess the impact of spending to stabilize the economy."

Legislation: "The impact of purchases made under the Act on the financial markets and financial institutions."

The impact on "financial markets and financial institutions" magically becomes the impact on "stabiliz[ing] the economy." Changing the purported goals of TARP is an easy way to criticize it for failing to address your pet causes.

Oversight Panel: "Evaluate market transparency."

Legislation: "The extent to which the information made available on transactions under the program has contributed to market transparency."

Again, a huge broadening of the Panel's mandate: from a discussion confined to the information made available in specific transactions, to a discussion of market transparency in general.

The last distortion of the legislation is a bit more subtle, though equally sweeping in its effect. Here's the last topic the legislation directs the Panel's report to address:

Legislation: "The effectiveness of foreclosure mitigation efforts, and the effectiveness of the program from the standpoint of minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers."

The Panel, however, conveniently splits this into two separate topics:

Oversight Panel: "Ensure effective foreclosure mitigation efforts."

Oversight Panel: "And guarantee that Treasury?s actions are in the best interest of the American people."

The legislation directs the Panel to discuss the long-term costs and benefits to the taxpayers of foreclosure mitigation efforts. The Panel, however, wants to talk about whether all of the Treasury's actions under TARP -- not just foreclosure mitigation efforts, which so far have been nil -- are in the best interest of the taxpayers.

For a law professor, Elizabeth Warren sure is bad at reading statutory language. Let's hope the Oversight Panel's second report isn't just another taxpayer-funded op-ed.

Full post as published by Economics of Contempt on December 15, 2008 (boomark / email).