WASHINGTON (1/12/09)—A vocal and consistent critic of the U.S. Treasury Department’s decisions concerning use of it Troubled Asset Relief Program (TARP) funds, Rep. Barney Frank (D-Mass.) Friday introduced a bill to amend statutory language in the bill that authorized the program. Frank said in a release that his TARP Reform and Accountability Act (H.R. 384) is intended to “strengthen accountability, close loopholes, increase transparency, and require Treasury to take significant steps on foreclosure mitigation.” The bill would amend provisions of the Emergency Economic Stabilization Act of 2008 (EESA) that created TARP. One provision important to credit unions and all federally insured depository institutions would make permanent the share and deposit insurance ceiling increase to $250,000, which was established on a temporary basis in EESA. Under some other, general, provisions of the bill, an insured depository institution receiving TARP funds:
* Would be required to report quarterly on the amount of any increased lending (or reduction in decrease of lending) and related activity attributable to the financial assistance; * Or, where that institution cannot categorize the effect of investment, it must report on lending and related activity during the period, with comparable prior period data.
Treasury, in consultation with the bank regulatory agencies, would have to establish standards for the required reporting. In new allocations of TARP funds, Treasury would be required to reach agreement with the institution and its primary federal regulator on how the funds are to be used. The department would have enlist benchmarks that would “advance the purposes of the Act to strengthen the soundness of the financial system and the availability of credit to the economy.” Under the Frank bill, examinations by a recipient institution’s primary federal regulator must specifically examine use of funds and compliance with any program requirements, including executive compensation and any specific agreement terms.