CCH Financial Reform News Center

Congressional Oversight Panel Examines AIG Rescue and Its Impact on Markets

By Serena Lynn, Editor, the CCH Federal Banking Law Reporter and Bank Digest.

The Congressional Oversight Panel (COP) has released its June oversight report, “The AIG Rescue, Its Impact on Markets, and the Government's Exit Strategy.” The panel found that the Federal Reserve Board and Treasury Department failed to exhaust all other options before undertaking their unprecedented, taxpayer-backed rescue of American International Group (AIG) and its creditors. The COP conducted a comprehensive overview of the AIG transactions based on a review of thousands of documents. After reviewing the federal government's actions leading up to the AIG rescue and the actions of the Treasury, the panel identified several major concerns:

COP Holds Hearing on AIG Assistance

This story appeared in Bank Digest.

The Congressional Oversight Panel will hold a hearing, on May 26, 2010, in Washington, D.C., on the financial  assistance provided to American International Group, Inc. (AIG) under the Troubled Asset Relief Program (TARP) and other government financial stability programs. The testimony gathered at this hearing will inform the Panel’s June 2010 oversight report by providing a better understanding of AIG’s current and future financial stability, the structure and staging of Treasury’s and the Federal Reserve’s investments, the rationale behind that support, and AIG’s prospects to repay the taxpayers’ investment.

May Oversight Report Focuses on TARP and Small Business Credit

This story appeared in Bank Digest.

The Congressional Oversight Panel's May report found little evidence that the Troubled Asset Relief Program has resulted in an increase in loans to small businesses. Small business credit remains “severely constricted,” the COP said, and a proposed new Treasury Department lending program would have only a small effect.

Congressional Oversight Panel to Hold Field Hearing on Small Business Lending

This story appeared in Bank Digest.

The COP has scheduled an April 27, 2010, field hearing in Phoenix, Ariz., to examine the nationwide contraction in bank lending in the wake of the financial crisis, with a particular focus on small business lending. The panel will hear from local bank officials and small business executives about their perspectives on credit availability and the performance of the Troubled Asset Relief Program.

COP Evaluates Progress of TARP Foreclosure Mitigation Programs

This story appeared in Bank Digest.

The COP has released its April oversight report, “Evaluating Progress of TARP Foreclosure Mitigation Programs.” The COP commended recent changes to the mortgage modification program designed to reach more homeowners, but found that the Treasury Department is still struggling to get its foreclosure programs off the ground even as the crisis continues unabated.

COP Says Treasury's Decisions on GMAC Severely Constrained Its Options

By Serena Lynn, Editor, the CCH Federal Banking Law Reporter and Bank Digest.

The Congressional Oversight Panel has released its March oversight report, “The Unique Treatment of GMAC Under TARP.” The panel found that the government's early decisions to rescue GMAC instead of pursuing other options as part of a broader bailout of the domestic automotive industry resulted in missed opportunities to increase accountability and better protect taxpayers' money. The panel found that the Treasury and the Federal Reserve Board made critical decisions during the height of the financial crisis that severely constrained their options for addressing GMAC's uncertain future. According to the COP, GMAC's bailout dollars have also supported crippling losses in its mortgage lending business. The panel is deeply concerned that the Treasury has not required GMAC to lay out a clear path to viability or a strategy for fully repaying taxpayers.

Congressional Oversight Panel to Hear from TARP CEOs

This story appeared in Bank Digest.

The Congressional Oversight Panel has announced two hearings with the chief executive officers of two TARP-recipient financial institutions. On Thursday, Feb. 25, 2010, the Panel will hear from GMAC Chief Executive Officer Michael Carpenter and Chief Financial Officer Robert Hull, as well as from Ron Bloom, Senior Advisor to the Secretary of the Treasury, Presidential Task Force on the Auto Industry. Jim Millstein, Chief Restructuring Officer for the Department of the Treasury Department, will also testify. On Thursday, March 4, 2010, Citigroup Chief Executive Officer Vikram Pandit and Assistant Treasury Secretary Herbert M. Allison Jr. will testify before the COP.

COP Analyzes Commercial Real Estate Losses and the Risk to Financial Stability

This story appeared in Bank Digest.

The COP has released its February oversight report, “Commercial Real Estate Losses and the Risk to Financial Stability.” The panel is deeply concerned that a wave of commercial real estate loan losses over the next four years could jeopardize the stability of many banks, particularly community banks, and prolong an already painful recession. According to the report, “community banks, unlike the largest Wall Street banks, face the greatest risk of insolvency due to mounting commercial real estate loan losses.”

COP to Hold Field Hearing on CRE

This story appeared in Bank Digest.

On Jan. 27, 2010, the Congressional Oversight Panel (COP) will hold a field hearing in Atlanta, Ga., on the state of commercial real estate lending, the potential effect of commercial real estate problems on the banking system, and the role and impact of the Troubled Asset Relief Program (TARP) in addressing that effect. The COP will hear from government witnesses as well as local bankers and investors about their perspectives on commercial real estate, the financing markets, and the performance of the TARP.

COP Assesses TARP Exit Strategy

This story appeared in Bank Digest.

The Congressional Oversight Panel has released its January oversight report, “Exiting TARP and Unwinding Its Impact on the Financial Markets.” The COP found that the repayment of TARP assistance represents only the first stage of exiting TARP. Even after repayments are complete, the Treasury will hold a massive pool of assets, worth hundreds of billions of dollars, for several years to come. Managing these assets will present extraordinary challenges. Furthermore, according to the panel, any effective exit strategy must address the unwinding of the implicit guarantee created by TARP.