On his first day on the job, Treasury Secretary Tim Geithner has issued new rules designed to curb lobbyists’ influence over the bailout, limit conflicts of interest and increase transparency over the department’s investment decisions.
From a Treasury statement:
Combating lobbyist influence in the EESA process: The Treasury Department will implement safeguards to prevent lobbyist influence over the program, including restricting contacts with lobbyists in connection with applications for, or disbursements of, EESA funds.Keeping politics out of funding decisions: The Treasury Department will ensure that political influence does not interfere with EESA decision making, using as a model for these protections the limits on political influence over tax matters.
Certification to Congress on objective decision making: In reporting to Congress, the Office of Financial Stability (OFS) will certify that each investment decision is based only on investment criteria and the facts of the case.
The investment process will be transparent and based on objective criteria:
-Only banks recommended by the primary bank regulator will be eligible for capital investments.
-OFS will publish a detailed description of the investment review process undertaken by the regulators and OFS.
-The Treasury Department will ensure adequate resources exist to process applications as quickly as possible with priority to the date of the application as received by OFS and will formulate procedures to ensure integrity and regularity in the application process.
Over the weekend, the New York Times reported that many of the banks receiving bailout funds continued to lobby the government — including on the bailout itself.
The devil, of course, will be in the details — and those details don’t yet appear to be forthcoming. What sort of safeguards, for instance, will limit the lobbying and political influence? How will OFS guarantee that investment decisions are on the level? Etc. Etc.
Still, combined with Geithner’s assurance in his confirmation testimony that Treasury will insist that banks do more to track the funds they receive, we can at least hope that the second half of the bailout will be slightly better run than the first.