Senators Target Fat Cat Abuse of Financial Bailout Money

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As we’ve seen from numerous contracting scandals in Iraq, the federal government can be great a handing out money (sometimes literally shrink-wrapped piles of it), but less skilled in tracking where it goes. So it’s without much surprise that we now see it throwing hundreds of billions of relatively unaccounted for dollars at financial companies as part of the Troubled Asset Recovery Program (TARP). But if senators Diane Feinstein (D-Calif.) and Olympia Snowe (R-Maine) get their way, the free-for-all may soon be reined in. According to a statement released today, they plan to reintroduce their Accountability for Economic Assistance Act (.pdf) to the Senate when it reconvenes in January. “At present, we don’t know whether these companies are using these funds to fly on private jets, attend lavish conferences or lobby Congress,” says Feinstein. “This bill puts clear restrictions on how funds can be used and mandates public reporting requirements to allow taxpayers to find out how their money is being spent.”

The bill’s provisions, according to the press release:

  • Prohibit firms receiving economic assistance from Treasury or emergency loans from the Federal Reserve from using such funds for lobbying expenditures or political contributions;
  • Require that firms receiving assistance provide detailed, publically available quarterly reports to Treasury outlining how federal funds have been used;
  • Establish corporate governance standards to ensure that firms receiving federal assistance do not waste money on unnecessary expenditures; and,
  • Create penalties of at least $100,000 per violation for firms that fail to meet the corporate governance standards established in the bill.
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