Financial Crisis News Center

COP Says Treasury's Decisions on GMAC Severely Constrained Its Options

By Serena Lynn, Editor, the CCH Federal Banking Law Reporter and Bank Digest.

The Congressional Oversight Panel has released its March oversight report, “The Unique Treatment of GMAC Under TARP.” The panel found that the government's early decisions to rescue GMAC instead of pursuing other options as part of a broader bailout of the domestic automotive industry resulted in missed opportunities to increase accountability and better protect taxpayers' money. The panel found that the Treasury and the Federal Reserve Board made critical decisions during the height of the financial crisis that severely constrained their options for addressing GMAC's uncertain future. According to the COP, GMAC's bailout dollars have also supported crippling losses in its mortgage lending business. The panel is deeply concerned that the Treasury has not required GMAC to lay out a clear path to viability or a strategy for fully repaying taxpayers.

Congressional Oversight Panel to Hear from TARP CEOs

This story appeared in Bank Digest.

The Congressional Oversight Panel has announced two hearings with the chief executive officers of two TARP-recipient financial institutions. On Thursday, Feb. 25, 2010, the Panel will hear from GMAC Chief Executive Officer Michael Carpenter and Chief Financial Officer Robert Hull, as well as from Ron Bloom, Senior Advisor to the Secretary of the Treasury, Presidential Task Force on the Auto Industry. Jim Millstein, Chief Restructuring Officer for the Department of the Treasury Department, will also testify. On Thursday, March 4, 2010, Citigroup Chief Executive Officer Vikram Pandit and Assistant Treasury Secretary Herbert M. Allison Jr. will testify before the COP.

COP Analyzes Commercial Real Estate Losses and the Risk to Financial Stability

This story appeared in Bank Digest.

The COP has released its February oversight report, “Commercial Real Estate Losses and the Risk to Financial Stability.” The panel is deeply concerned that a wave of commercial real estate loan losses over the next four years could jeopardize the stability of many banks, particularly community banks, and prolong an already painful recession. According to the report, “community banks, unlike the largest Wall Street banks, face the greatest risk of insolvency due to mounting commercial real estate loan losses.”

COP to Hold Field Hearing on CRE

This story appeared in Bank Digest.

On Jan. 27, 2010, the Congressional Oversight Panel (COP) will hold a field hearing in Atlanta, Ga., on the state of commercial real estate lending, the potential effect of commercial real estate problems on the banking system, and the role and impact of the Troubled Asset Relief Program (TARP) in addressing that effect. The COP will hear from government witnesses as well as local bankers and investors about their perspectives on commercial real estate, the financing markets, and the performance of the TARP.

COP Assesses TARP Exit Strategy

This story appeared in Bank Digest.

The Congressional Oversight Panel has released its January oversight report, “Exiting TARP and Unwinding Its Impact on the Financial Markets.” The COP found that the repayment of TARP assistance represents only the first stage of exiting TARP. Even after repayments are complete, the Treasury will hold a massive pool of assets, worth hundreds of billions of dollars, for several years to come. Managing these assets will present extraordinary challenges. Furthermore, according to the panel, any effective exit strategy must address the unwinding of the implicit guarantee created by TARP.

Monthly Report Examines TARP Achievements

This story appeared in Bank Digest.

The Congressional Oversight Panel's (COP's) December oversight report, “Taking Stock: What Has the Troubled Asset Relief Program Achieved?” concludes that the program was an important part of a broader government strategy that stabilized the U.S. financial system. However, the COP warned, it is apparent after 14 months that significant underlying weaknesses in the financial system remain.

COP to Hold Hearing on TARP Effectiveness

This story appeared in Bank Digest.

The Congressional Oversight Panel has scheduled a hearing at which economists will testify on the effectiveness of the Troubled Asset Relief Program. The November 19 hearing is intended to give the panel a better understanding of the Obama administration's financial stabilization efforts and help with the panel's December TARP report.

COP Report: Asset Guarantees Had Calming Effect, But Other Concerns Remain

In its November 2009 monthly report, the Congressional Oversight Panel (COP) studied government-backed guarantees under the Troubled Asset Relief Program.  The COP stated in the report that the asset guarantees from the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation helped calm panic in financial markets, with minimal cost to taxpayers to date. The report raised concerns about moral hazard created by the guarantees and recommended greater disclosure by the Treasury Department with regard to government-guaranteed assets of Citigroup Inc. COP Chair Elizabeth Warren commented on these issues in an interview on CNBC.

COP Plans Mortgage Foreclosure Hearing in Philadelphia

This story appeared in Bank Digest.

The Congressional Oversight Panel announced that it will hold a field hearing to examine foreclosure mitigation efforts under the Troubled Asset Relief Program on Thursday, Sept. 24, 2009, at 10:00 a.m. in the Kirby Auditorium of the National Constitution Center in Philadelphia, Pa.

Geithner Sees Government Winding Down Support for Financial System

By Sarah Borchersen-Keto, CCH Washington News Bureau, Contributing Author, the CCH Federal Banking Law Reporter.

Treasury Secretary Tim Geithner said the government must begin to wind down some of the extraordinary support put in place for the financial system as its strategy evolves from one of crisis response to recovery.

Speaking September 10 to the Congressional Oversight Panel (COP), the watchdog body overseeing the government’s $700 billion Troubled Asset Relief Program (TARP), Geithner said that while the U.S. financial system is in “substantially stronger” shape than it was three, six or nine months ago, it is still the case that “substantial, enormous” challenges lie ahead.