The Bush administration overpaid tens of billions of dollars for stocks and other assets in its massive bailout last year of Wall Street banks and financial institutions,a new study by a government watchdog says.
The Congressional Oversight Panel,in a report released Friday,said last years overpayments amounted to a taxpayer-financed $78 billion subsidy of the firms.
The findings added to the frustrations of lawmakers already wary of the $700-billion rescue plan,known as the Troubled Asset Relief Program. Congress approved the plan last fall,but members of both parties criticised spending decisions by the Bush administration and former Treasury secretary Henry Paulson.
Financially ailing insurance giant American International Group,which the Treasury Department deemed to be too big to be allowed to fail,received $40 billion from the Treasury for assets valued at $14.8 billion,the oversight panel found.
In December,in response to questions from the oversight panel,the department wrote that the value of preferred stock purchased by the government was at or near par,meaning Treasury paid $1 for every $1 dollar of asset.
The way the Treasury secretary described it does not fit with the numbers that were produced in our much more extensive valuation analysis, panel chairwoman Elizabeth Warren told reporters on Friday. The secretary of the Treasury described it in December that these were par transaction and that is not supported by the numbers.
The continued scrutiny comes as new Treasury secretary Timothy Geithner prepares to place the Obama administrations imprint on the program with a sweeping new framework for helping banks,loosening credit and helping reduce foreclosures. Geithner plans to unveil the changes Monday.
And while Paulson is gone and Geithner is in charge,the program itself remains in the hands of Neel Kashkari,a holdover from the Bush administration. In December,Kashkari defended the Treasury purchasing strategy as bank stock prices dropped.