GAO: Treasury Needs Better Oversight of Bailout FundsA Government Accountability Office audit says the Treasury Department needs to have stronger controls in place to oversee how banks and other recipients are using funds from the $700 billion financial bailout package.
The GAO's report to Congress states the Treasury Department does not have a mechanism in place to track how banks are using the money that bought $150 billion in bank stocks by late November. The report may increase Congress' concerns about banks not using the money to increase lending and that their actions aren't being watched over carefully.
The report says there are weaknesses in how the Treasury determines if banks that got bailed out were also limiting executive compensation and investor dividends.
Among GAO's recommendations:
Wall Street Down, Then Recovers
In a session marked by indecision, investors bought stock on Tuesday, and the Dow closed up 270 points. Bolstered by good news from Ford and General Electric, the market bounced back after a 670-point drop on Monday. Ford's news: that it would be able to weather 2009 without federal intervention. GE's announcement was that it expects to pay a dividend despite earlier projections that fourth quarter results will near the low end of its projections.
The market fluctuated sharply before closing up 270 points at the 8,419 level and all major indexes ended on gains of more than 3 percent.
Fed Extends Key Credit Programs
The Fed will extend key programs designed to break down credit freezes and restoring financial market stability. The programs, aimed at busting through credit clogs and restoring stability to financial markets, were originally to end on Jan. 30 but will be extended through April 30. The Fed's emergency lending facility, where investment firms can go to borrow from a readily available source, is also covered under this announcement.
Ford Wants $9 Billion, GM $12 Billion
Ford Motor Co. asked Congress for a $9 billion "stand-by line of credit" to buoy its business, but says it won't dip into it unless one of the other two Big Three automakers goes bankrupt. Ford says it will have enough money to make it through next year without governmental help in its plan that projects the company will break even or turn a pretax profit as early as 2011.
GM also turned in a report to Congress on Tuesday warning it needs $12 billion to keep operating by late March, and bluntly says that its collapse could produce severe, long-term consequences to the U.S. economy.
The Big Three's executives have also toned down their lavish travel on corporate jets, and now are arriving via cars driven across country or commercial airlines. Ford's head has pledged if the company gets government money, he will work for $1 in 2009. Ford's plan also calls for cancelling all management employees' 2009 bonuses, scrap merit increases for its North American salaried staff for 2009, and will sell its five corporate aircraft.
Obama to Name Richardson Commerce Secretary
President-elect Barack Obama will name New Mexico Governor Bill Richardson as his nominee to head the Commerce Department on Wednesday. The appointment of Richardson, a former UN ambassador and energy secretary, would make him the first Hispanic named to Obama's cabinet.