the financial system and the economy. These actions have, among other things, improvedthe ability of financial institutions to avoid severe funding market pressures that couldhave led to an escalation of stresses and disorderly failures. In addition, Treasury,through the TARP, has made capital available to a wide range of financial institutions tostrengthen their financial positions, which reduced pressures to pull back from extendingcredit to households, businesses, and state and local governments. More generally, theactions taken under the TARP and the authorities granted by the EESA have helpedpromote confidence in the financial markets and U.S. financial institutions, which is acritical first step to the restoration of more normal financial market and economicactivity. The Oversight Board believes that, without the actions taken by TARP duringthe quarterly period, the severity of the financial crisis and its impact on the U.S.economy, consumers, businesses, and state and local governments would be materiallygreater.Significant challenges, however, lie ahead for the TARP, particularly in light of the continuing stresses in the financial sector and the weakened outlook for the U.S.economy. Initially, it is important that the remaining $350 billion in funds included inthe EESA be made available so that the TARP has additional resources to continue topursue the important objectives that Congress has established for the TARP. At therequest of the President-elect, the Administration on January 12, 2009, submitted to theCongress the notification and report necessary to make these resources available. Carefulconsideration will need to be given as to how best to utilize any additional TARPresources to further improve liquidity and stability to the U.S. financial system andpromote a restoration of economic growth in a manner that, consistent with the EESA:protects home values, college funds, retirement accounts and life savings; preserveshomeownership; promotes jobs and economic growth; maximizes overall returns to thetaxpayers of the United States; and provides public accountability.The Oversight Board believes it will be important for the Treasury to be able tocontinue to take actions under the TARP to stabilize financial markets, help strengthenfinancial institutions, improve the functioning of the credit markets, and address systemicrisks, given the disproportionate consequences that instability of the nation’s financialinstitutions and markets may have for the broader economy. As additional resourcesbecome available, the Oversight Board also believes that it will be important for theTARP to continue to pursue effective strategies for providing resources in support of reducing preventable foreclosures due to the harm that such foreclosures may have on theaffected borrowers, communities, the housing market, and the financial system andbroader economy. Moreover, as the program evolves, it will be important for TARP tocontinue to pursue strategies designed to allow the TARP to exit from its financialinterests in a timely manner consistent with the objectives of the EESA.During the first quarter of operations under the TARP, the Treasury has takenimportant steps to develop the infrastructure, internal controls, and compliance,monitoring and reporting programs necessary for the TARP to operate effectively,transparently, and in the public interest. For example, Treasury quickly hired or retainedqualified staff and outside experts to facilitate the prompt development and
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