Dear Special Inspector General Barofsky:
The U.S. Government is approaching majority owner status for several U.S. companies through equity investments made pursuant to the Troubled Asset Relief Program and several Federal Reserveprograms. The companies subject to large government ownership positions including AIG, GM, GMAC, Citigroup, and Bank of America are some of the nation's leading insurance, banking, industrial and lending institutions. Publicly available information suggests that the Treasury, the Federal Reserve,and/or other federal regulators have operated with varying degrees of oversight and interaction involving the management of these companies with respect to issues of governance, compensation, and operating decisions.
Treasury has stated that public ownership of institutions is not a policy goal, that direct involvement in daily management of institutions in which it has made large investments is expected to be limited, and that the Government's equity stake in these institutions is expected to be short lived.Nevertheless, the Congress and the public have raised questions regarding the extent of government involvement in overseeing these institutions, whether adequate measures are being taken to protect and recoup the taxpayer's investment in these firms, and whether there is adequate transparency indecision making. Without effective risk assessments, plans, internal controls, oversight, and transparency, the Government's substantial investment may be at risk. At the same time, the U.S. Government must strike the right balance between oversight and unduly infringing on company management and efforts to regain self sufficiency.
Given the above, I am requesting that SIGTARP undertake a body of audit work to examine the following issues:
(1) what is the extent of Government involvement in management of companies in which it has made able investments, including direction and control over such elements as governance, compensation,spending, and other corporate decision making.?
(2) To what extent are effective risk management, internal controls, and monitoring in place to protect and balance the Government's interests and corporate needs?
(3) Are there performance measures in place that can be used to track progress against long term goalsand timeframes affecting the Government's ability to wind down its investments and disengage from these companies?
(4) Is there adequate transparency to support decision making and to provide full disclosure to the Congress and the public?
I expect that SIGTARP will issue an initial report of its findings related to the above as well as continue to monitor the evolution of the Government's involvement with these institutions and to provide updated assessments to the Congress as warranted.
I appreciate the effective work you have done since assuming the position of Special Inspector General for TARP, and I hope this audit will further the oversight goals of your office.
Sincerely,
Max Baucus Chairman
Source: Ranking Member’s News
