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The Final Report of the Congressional Oversight Panel

The Final Report of the Congressional Oversight Panel

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03/17/2011

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In each of its three reports on the industry, the Panel called for Treasury to articulate clear
goals and benchmarks by which progress could be measured. Treasury, however, has never
articulated a clear set of goals for these programs. Instead, it has articulated a number of goals at
different times, many of which may ultimately be conflicting. For example, at a Panel hearing in
June 2009, then-Panel Chair Elizabeth Warren asked Assistant Secretary Allison, ―Can you
explain in some general strokes, the strategic thinking on the part of your team in terms of what

we are trying to accomplish with the auto industry?‖388

Assistant Secretary Allison responded:

What we‘re trying to do is to allow the automobile industry and encourage the

automobile industry to restructure so that it is again a highly-competitive sector of
our economy and can grow and create more jobs over time and that‘s the reason
why the Administration – actually, they were asked to take part in this. That‘s the
reason why they‘ve decided it was necessary to do so. The outlook here is very
important to the whole economy and I think that‘s been the underlying reason

why the Administration has acted in the way it has.389

In a later hearing on the automotive industry, senior Treasury advisor Ron Bloom defined

success as primarily a question of return on investment: ―the greater percentage of the money
that we invested that we get back, the greater success.‖390

These differing and potentially
conflicting goals make it difficult to determine whether the TARP‘s interventions in the auto
industry should be judged to be successful. Instead, the articulation of multiple goals, without
specification of their priority, allows Treasury to claim success if the program achieves any one
of these goals.

The Panel also called on Treasury to provide a detailed plan for exiting its position in
each company. In particular, in its March 2010 report, the Panel urged Treasury to require
greater accountability on the part of GMAC/Ally Financial by insisting that the company
produce a viable business plan showing a path toward profitability. Given that a GMAC/Ally
Financial IPO, which is likely to occur later this year, would provide an opportunity for Treasury
to sell its GMAC/Ally Financial holdings, Treasury should clearly outline its proposed strategy

388

Congressional Oversight Panel, Testimony of Herbert M. Allison, Jr., assistant secretary for financial
stability, U.S. Department of the Treasury, Transcript: COP Hearing with Assistant Treasury Secretary Herb
Allison
, at 23 (June 24, 2009) (online at cop.senate.gov/documents/transcript-062409-allison.pdf).

389

Id. at 24.

390

Congressional Oversight Panel, Testimony of Ron Bloom, senior advisor, U.S. Department of the
Treasury, Transcript: COP Field Hearing on the Auto Industry, at 38 (July 27, 2009) (online at
cop.senate.gov/documents/transcript-072709-detroithearing.pdf).

128

for divesting itself of some or all of its position as the IPO approaches. There remain, in
addition, certain obstacles that Treasury must overcome before it can successfully and fully exit

its position in all of these companies and, as discussed in the Panel‘s January 2011 report,

Treasury has yet to articulate a clear plan for addressing these challenges. The Panel also
recommended that Treasury require that any entity receiving TARP funds be subject to more
stringent criteria and due diligence to establish that it would become a profitable concern, and
that any such entity be subject to use of funds disclosure requirements. Specifically, the Panel
suggested that Treasury take these steps retroactively with regard to its investment in
GMAC/Ally Financial. Treasury has never acted to implement this recommendation.

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