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TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................ 2VALUING TARP ACQUISITIONS .............................................................................................. 4TREASURY DEPARTMENT UPDATES SINCE PRIOR REPORT ......................................... 12OVERSIGHT ACTIVITIES ......................................................................................................... 15FUTURE OVERSIGHT ACTIVITIES ........................................................................................ 16ABOUT THE CONGRESSIONAL OVERSIGHT PANEL ........................................................ 17APPENDIX I: LETTER FROM MR. LAWRENCE SUMMERS TO CONGRESSIONALLEADERSHIP, DATED JANUARY 15, 2009 ............................................................................ 18APPENDIX II: LETTER FROM CONGRESSIONAL OVERSIGHT PANEL CHAIRELIZABETH WARREN TO TREASURY SECRETARY MR. TIMOTHY GEITHNER,DATED JANUARY 28, 2008 ...................................................................................................... 22APPENDIX III: REPORT OF THE ADVISORY COMMITTEE ON FINANCE ANDVALUATION TO THE CONGRESSIONAL OVERSIGHT PANEL ........................................ 25APPENDIX IV: SUMMARY OF THE LEGAL REPORT TO THE CONGRESSIONALOVERSIGHT PANEL FOR ECONOMIC STABILIZATION CONCERNING THE TARPINVESTMENTS IN FINANCIAL INSTITUTIONS ................................................................... 39APPENDIX V: LINK TO VALUATION REPORT OF DUFF & PHELPS TO THECONGRESSIONAL OVERSIGHT PANEL ................................................................................ 51
 
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EXECUTIVE SUMMARY
A central question surrounding the Troubled Asset Relief Program (TARP) is whether the U.S.Department of the Treasury’s (Treasury) policy of injecting cash into financial institutions hasresulted in a fair deal for taxpayers. The focus of this report is a financial valuation study of theterms of Treasury’s program to invest capital in financial institutions. The report wascommissioned as part of the Congressional Oversight Panel’s continuing investigation into theterms of the TARP. The report was conducted for the Panel by its Advisory Committee onFinance and Valuation (Advisory Committee) and by the international valuation firm, Duff &Phelps Corporation; the Advisory Committee’s report is attached to this report and the longercomplete Duff & Phelps valuation report is posted on the Panel’s website.
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The valuation report concludes that Treasury paid substantially more for the assets it purchasedunder the TARP than their then-current market value. The use of a one-size-fits-all investmentpolicy,The valuation reportwas enhanced by an accompanying legal analysis of the terms of the TARP transactions, whichis also attached to this report.
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Congressional Oversight Panel (online at cop.senate.gov).
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That policy includes creation of a uniform capital infusion program, acceptance of a limit on themarketability of the securities Treasury received, and terms that encourage institutions to replenish their privatecapital.
rather than the use of risk-based pricing more commonly used in market transactions,underlies the magnitude of the discount. A number of reasons for this result have beensuggested. The Panel has not determined whether these reasons are valid or whether they justifythe large subsidy that was created. In addition, the Panel has not made judgments about whetherthe decision-making underlying these investments was sound. The rationale for the Treasury’sapproach and the impact of this disparity will be subjects for the Panel’s continued study andconsideration. It is important, however, for the public to understand that in many cases Treasuryreceived far less value in stocks and warrants than the money it injected into financialinstitutions.The legal analysis concludes that the documentation for the investments was standardized. Theuse of standardized documents likely contributed to Treasury’s ability to obtain speed of execution and wide participation, but it meant Treasury could not address differences in creditquality among various capital infusion recipients through variations in contractual termsgoverning the investments or impose specific requirements on a particular recipient that mighthelp insure stability and soundness.The February report also provides an update on the Panel’s previous work, as well as a review of the key actions and changes at Treasury regarding the TARP since the Panel’s last report. In itsinitial report, on December 10, 2008, the Panel asked ten questions about the TARP and a seriesof sub-questions on the strategy, goals, methods, and operations of the program. In its nextreport, issued on January 9, 2009, the Panel analyzed Treasury’s response to the Panel’squestions and highlighted four specific areas where Treasury most needed to provide additionalinformation:
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qwester

Nowhere do I see any concern for the enormous pre bubble loss in equity by all property owners in the nation. The bank, even when measured by this low standard, will benefit greatly with each of the REO properties they acquire. Losses based upon peak bubble equities are gossamer fantasies. REO properties must be rented out at low rates before they deteriorate. Renters will maintain for less.

reply06 / 03 / 2011
echojurist

Author: Dr. Ulysses s. Crockett, Jr.: Treasury Sec'y Timothy Geithner must be prosecuted for violations of ssecurities, specifically SEC Rule 10-b-5 which prohibits unlawful use of insider information in the trading of securities. Beithner must recse himself from taxpayer bailout proceedings and fired for withholding bailout fund expenditure information, conflict of economic interest, fraud in forcing Bank America Pres. Ken Lewis to "buy" Merrill-Lynch under direction of private citizen Banjamin Shalom Bernanke who must also be criiminally prosecuted for securities law violations. See, Ulysses S. Crockett, Jr., 'Federal Taxation of Interest On Indebtedness In Corporae Acquisitions: A Congressional Response In Merger Tax Reform', 10 Indiana Law Eview 419 (1976); http://blogigo.com/ulyssesecojuirist.

reply05 / 07 / 2009
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