SIGTARP Report a Cautionary Tale for the Obama Administration and Congress |
Monday, 01 February 2010 06:26 |
Geithner’s Treasury Continues to Oppose Imposition of Conflict-of-Interest Barriers
“In July of last year, I released a report detailing the role that the government’s ‘affordable housing policies’ played in creating the global financial crisis,” Issa said. “The SIGTARP’s report is just another reminder of how Congress and the Administration have ignored the role that politics and government played in causing the housing crisis and the economic collapse while pursing other regulatory reforms will not fix the underlying problem.”
The SIGTARP Report also detailed how the Treasury Department continues to stonewall “one of SIGTARP’s most important recommendations” – the implementation of “strict information barriers or ‘walls’ between the PPIF managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds trading in the same kinds of securities.” As the report says, “for various reasons, Treasury has decided that requiring such walls ‘is simply not practical in the context of PPIP,’ and has refused to adopt this recommendation.
“It is disappointing but not unsurprising that the Treasury Department under the leadership of Secretary Geithner is once again stonewalling transparency,” Issa said. “Frankly, just because it may be inconvenient is not a good enough excuse to justify leaving taxpayer dollars vulnerable to manipulation and fraud. It’s downright deceptive for this Administration to talk about accountability and transparency while refusing to impose conflict-of-interest barriers recommended by the SIGTARP.”
According to the report released last year by Issa, government intervention “created ‘affordable’ but dangerous lending policies which encouraged lower down payments, looser underwriting standards and higher leverage. Finally, government intervention created a nexus of vested interests – politicians, lenders and lobbyists – who profited from the ‘affordable’ housing market and acted to kill reforms. In the short run, this government intervention was successful in its stated goal – raising the national homeownership rate.” Issa added, “These are smoking gun reports that highlight the perils in continuing the bailout first mentality that has continued to leave us vulnerable to repeat the cycle that led to the financial meltdown. Congress and the Administration need to act thoughtfully, deliberately and honestly to stave off another collapse.” Key Facts and Conclusions from the Issa’s report included:
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