We are in desperate need of transparency and accountability throughout our government.  At this time, that need is particularly critical in the massive economic bailout program.

 

We are told that we are experiencing the greatest financial crisis since the great depression.  Estimates of the bailout expenditures or commitments by our government to date range from several hundred billion dollars to more than seven trillion dollars.  One economic consultant calculated that these amounts exceed the total cost of most of the major undertakings by our country to date.  The final cost of these government commitments cannot be known precisely until the government disposes of all of the assets that it has acquired.  What is clear, however, is that this cost will result in unprecedented government deficits.

 

Congress rushed through legislation with no real opportunity to evaluate the merits or to take into account the views of the public.  The Administration has shifted from one approach to the next, piling on one acronym program after another.  The various agencies of the government that are involved in the rescue (the Department of the Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Federal Housing Administration) are subject to different rules. Congressional oversight to date consisted of piecemeal hearings on the different parts of the ever-changing rescue plan.

 

The People have a great interest in this debacle.  It is their lives that are being affected in very fundamental ways.  It is their money that is being used in attempts to stem the tides.  It is their government that failed in its obligations to protect their interests.  They are bewildered, and not enough attention is being paid to addressing their concerns.

 

Initially, there were plenty of acknowledgments of the need for transparency.  On September 18, 2008, Speaker Nancy Pelosi stated that all of the transactions under the initial bailout bill would be posted on the Internet within 48 hours and “that transparency, that oversight, will be very important to the health of our economy.”  Treasury Secretary Paulson said early on that “Transparency throughout this process will be important …,” and on October 13, Neel Kashkari (the Treasury official responsible for implementation of the initial program) announced that “We are committed to transparency and oversight in all aspects of the program.” The reality, however, is that most of the information concerning the different parts of the rescue effort have been shrouded in secrecy. 

 

On December 3, House Republican leaders sent a letter to Secretary Paulson for information concerning the use of the bailout money.  On December 8, a broad-based coalition of over 70 organizations sent a letter to Congress requesting action concerning transparency.  On December 18, Fox News filed a suit against the Treasury Department in an effort to obtain information concerning the Department’s bailout transactions with American International Group, Inc., Citigroup Inc., and the Bank of New York Mellon.  Bloomberg has filed suit against the Federal Reserve for disclosure of information concerning emergency loans to certain banks. 

 

On December 22, the Associated Press reported on its efforts to gain information from banks.  It contacted 21 banks that had received more than $1 billion in bailout funds and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest? None of the banks provided specific answers.  As of December 23, portions of contracts awarded by the Treasury Department for services related to the bailout still remain blacked out after numerous requests – never mind whether there was adequate competition in the award of these contracts.

 

Worst of all, the Congressional Oversight Panel established by the initial bailout legislation has been stonewalled by the Treasury Department.  On January 9, the Panel released its second report to the Congress.  The report documents the efforts to get answers from Treasury, and details the many questions that remain un-addressed or un-answered.

 

That is what the people are getting from their government in return for their tax money.  Under our system, we are supposedly entitled to transparency and accountability, particularly concerning the expenditure of the public’s funds.  We deserve answers not only to the question of how we have responded to this crisis so far, but also to the question of how we got here.  In addition, we are entitled to a comprehensive approach to the solution of this crisis.

 

In a January 6, 2008, New York Times Op-Ed column “Where Is Our Ferdinand Pecora?” Ron Chernow describes the Senate Banking and Currency Committee hearings at the time of the great depression.  Although the hearings may have suffered from some shortcomings, they did provide a comprehensive overview of the problems and provided a sound basis for reform.  We might be able to garner some valuable pointers from this history.

 

Chernow writes that in our current crisis:

 

 

Indeed, we need a thorough and systematic examination of the causes and history of this disaster to formulate legislative/regulatory proposals and to build the political support for the enactment of effective measures. 

 

In addition, we need such a comprehensive review to hold accountable those who are responsible.  President-elect Obama said in his speech of January 8: “This crisis did not happen solely by some accident of history or normal turn of the business cycle … We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC.”  We clearly must act expeditiously to forestall a worsening of this crisis, but at the same time we must have real transparency about what happened and how we have dealt with the crisis so far, and we must have genuine accountability.