Addressing your concerns on oversight of last year’s rescue package

In both rounds of “Open for Questions” that we’ve hosted here, there’s been a dominant theme in questions about the economy.  In the first round Diane from New Jersey had one of the most popular questions overall, asking, “What will you do to establish transparency and safeguards against waste with the rest of the Wall Street bailout money?”  One of the top questions in second round came from Dorothy in Tucson, Arizona, who asked, “I’m concerned about the banks who received tax payers money and have had no accountability. Will this be corrected after President-elect Obama is in office?”

Today Lawrence Summers, Director-designate of the National Economic Council, addressed these widespread concerns from both the public and Congress in a letter (pdf) to bipartisan Congressional Leaders.  As President-elect Obama requests that the second half of the Troubled Asset Relief Program (TARP) funds be released, Summers gave assurances that there would be sweeping changes in the use and accountability of those funds going forward:

“[T]he President-elect also shares the frustration of the American people that we have seen too little effect from this rescue plan on jobs, incomes, and the ability of responsible homeowners to stay in their homes. He believes the American people are right to be angry with the way this plan has been implemented.  President-elect Obama believes there has been too little transparency and accountability; too much upside for financial institutions and executives who acted irresponsibly without providing enough help for small business owners, families who are struggling to keep their jobs and make ends meet, and innocent homeowners. 

“That will change when President-elect Obama takes office.”

The letter goes on list five specific pledges from President-elect Obama.

1) To use “Our Full Arsenal of Tools” to make sure credit gets flowing not just financial institutions but to “small businesses, auto purchasers, and municipalities.”

2) To reform oversight both of the TARP and our financial system at large, including “a full and accurate accounting of how the Treasury Department has allocated the funds spent to date and going forward.”

3) To “Launch a Sweeping Effort to Address the Foreclosure Crisis,” reducing the number of preventable foreclosures “by helping to reduce mortgage payments for economically stressed but responsible homeowners while also reforming our bankruptcy laws and strengthening existing housing initiatives like Hope for Homeowners.”

4) To impose new “tough and transparent conditions” on firms getting taxpayer money to ensure that the money is being used to get credit flowing and bolster the economy, not for personal profit.

5) To increase the role of private capital, and “invest taxpayer money only when sufficient private capital cannot be attracted.”

Summers closes the letter emphasizing the need to work together to get through this “economic storm,” and reiterates the call for urgency: “President-elect Obama believes it is not too late to change course, but it will be if we don’t take dramatic action as soon as possible.”