Bailout money at stake unless Treasury chiefs supply top-notch checks

You knew it. We knew it. Even the man behind the tree knew it. We all knew the federal government was in over its head when it started handing out $700 billion to the nation's corporations.

Now the Government Accountability Office has made it official. Unless the Treasury Department officials in charge of the Troubled Asset Relief Program, or TARP, figure out what is going on, the taxpayers may lose more money than even they feared.

The GAO auditors said in a report released Tuesday that the Treasury Department needs more staff and better management to make sure TARP uses the money more effectively.

A Treasury official wrote back to the GAO that it got the message and will fix things. Of course. What do you expect Treasury officials to say? Letters won't do. Action will.

Luckily, Congress required the GAO report when it authorized the TARP bailout. Even luckier, Congress has required a whole series of these reports.

Tuesday's GAO report said the bailout program needs monitoring that is consistent and transparent.

"Without a strong oversight and monitoring function," the report said, "Treasury's ability to help ensure an appropriate level of accountability and transparency will be limited."

The GAO report noted that some of the offices, including the one implementing the program, are not fully staffed. But because of the change in administrations, filling the rest of those jobs may be even more difficult than usual.

Here's an example of what could go wrong. So far $150 billion in TARP money has gone to 52 institutions. The Treasury Department has hundreds more applications for the funds from banks across the country. But the money is supposed to be made available to lenders. That is, bailed-out banks should lend it to businesses that want to build new buildings or push more products. That, in turn, would get cash flowing through the system. Instead, banks have used a large portion of the money to gobble up other institutions.

In addition, the Treasury is not sure the money has not been used to pay CEOs, something the legislation ruled out.

No one expected it to be easy to run an undertaking of this size and degree of novelty. But certain elementary steps have been overlooked. For example, the Treasury has yet to require the recipients of the bailout money to say what they are spending the money on. Isn't that the first requirement when dealing with taxpayer money?

Small steps like that could provide a form of instant oversight. Too much is at stake both in the amount of the taxpayers' money involved as well as the future of the economic system to be frittered away by bureaucratic ineptitude. Thank goodness for the GAO. Congress should pay attention to this report. It should make Treasury officials do likewise, whether they work of President Bush's administration or President-elect Obama's.