The Treasury Department was thorough and fair in picking firms to invest bailout money, a new watchdog report says.
Treasury prevented possible conflicts of interest and safeguarded taxpayer dollars by using outside experts and careful record keeping, according to the report, issued Thursday by the special inspector general for the bailout fund.
The public-private investment funds include private investments and matching funds from the $700 billion financial bailout. They buy the mortgage investments that were at the root of the financial crisis. They aimed to boost demand for those securities, which clogged bank balance sheets in the months after the financial system teetered in September 2008.
In the report, the Special Inspector General for the Troubled Asset Relief Program, Neil Barofsky, identifies some missteps by Treasury. He says some applicants suffered because Treasury failed to explain crucial program changes. And the report notes that three huge fund managers helped design the program then were allowed to apply. They could have gamed the process to improve their own chances.
But the report is far less critical than many of Barofsky's earlier audits. He has blasted Treasury for excessive secrecy and a soft-touch approach to negotiating with banks. By contrast, Thursday's report merely says the problems left Treasury's actions "vulnerable to criticism."
Treasury spokesman Mark Paustenbach said the report shows that taxpayers will likely turn a profit on the fund program. He said the initiative helped get credit flowing at a critical time.
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