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It looks like the limits on executive compensation that Democrats in Congress fought to include in the bailout bill aren't a top priority for Treasury.

From the GAO report:

[A]t this point, the officials have not determined how Treasury will monitor executive compensation compliance. Bank regulators varied in their views about their oversight responsibilities related to compliance with executive compensation requirements and other required terms of CPP. For example, one regulator noted that it would rely on the institution's board of directors to assess compliance, and another regulator stated that it was Treasury's responsibility to provide such oversight. Without a consistent process for monitoring participating institutions, Treasury's ability to identify and address any potential problems in these institutions' compliance with program requirements will be limited.

In other words, Treasury officials aren't even on the same page with each other about how to enforce the limits -- and some think it can be left to the banks, fox-henhouse concerns be damned.

Here's a bit more detail, from page 25 of the GAO report, on what seems like the Treasury's utter aversion to requiring banks to offer any information whatsoever on what they're doing with the billions of dollars of taxpayer money they're getting.

[I]t is unclear how OFS and the banking regulators will monitor how participating institutions are using the capital investments and whether these goals are being met. The standard agreement between Treasury and the participating institutions does not require that these institutions track or report how they plan to use, or do use, their capital investments.

... With the exception of two institutions, institution officials noted that money is fungible and that they did not intend to track or report CPP capital separately. ...

The banking regulators indicated that they had not yet developed any additional supervisory steps, such as requiring more frequent provision of certain call report data for participating institutions, to monitor participating institutions' activities.

So it seems to come down to this: the banks won't say what they're doing with the money, and Treasury is too polite to ask.

The authors of the GAO report don't appear impressed by Treasury's efforts to avoid conflicts of interest -- one of the prime concerns raised by some observers, given the number of top Treasury officials who used to work for companies receiving money under the bailout program.

From the report:

Lacking a comprehensive and complete system to monitor conflicts of interest, Treasury runs the risk that it may not be able to ensure that conflicts are fully identified and appropriately addressed.
Doesn't sound too encouraging.

The GAO report makes clear that the urgency of the crisis has meant that oversight procedures have taken a backseat. It concludes in part:

Because TARP is relatively new, and because the crisis makes immediate action imperative, Treasury is operating on a number of fronts concurrently. It is setting up programs and establishing oversight policies and procedures at the same time. As a result, we are seeing some lag in administrative efforts -- for example, internal controls -- as the programs proceed. ...

Treasury has not yet set up policies and procedures to help ensure that [Capital Purchase Program] funds are being used as intended.

And it recommends that those procedures be set up as soon as practicable.

The report is now available online (pdf).

Check out this nugget from page 15 of the GAO report on how Treasury is spending the bailout money:

[Treasury's Office of Financial Stability] has not yet determined if it will impose reporting requirements on the participating financial institutions that could enable OFS to monitor, to some extent, how the financial institutions are using capital infusions.
In other words, Treasury may not force banks even to tell the department how the banks using the billions of dollars they're getting. It's a no-strings-attached deal, it would seem.

More to come...

A just-released report by the Government Accountability Office on how the Treasury Department is using the $700 billion allocated to it by Congress for the financial bailout reaches some discouraging conclusions.

It finds that:

Treasury has yet to address a number of critical issues, including determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation and dividend payments. Moreover, further actions are needed to formalize transition planning efforts and establish an effective management structure and an essential system of internal control.

We're looking through the report here at TPMmuckraker and will bring you more detail as we find it...

A staffer for the Georgia senator says unequivocally that Isakson isn't blocking a vote on the nomination of Neil Barofsky to be bailout IG.

As for Voinovich of Ohio, a reader reports that a staffer in his office "said that he has not done it as far as they are aware and feel that if he had done it he would have announced that he did it. They said he is pro-oversight and just sent a letter to Pelosi and Reid requesting that a bailout overseer be assigned for the auto industry package."

That's 13 out of 49 largely ruled out. Keep making those calls!

Birmingham mayor Larry Langford was arrested Monday on charges of steering sewer contracts to a friend while on the commission of Jefferson County, which is now near bankruptcy. The FBI handed down a 101-count indictment for the Democratic "Mayor LaLa" as well as Montgomery investment banker Bill Blount and lobbyist Al LaPierre, who both had posts in the local Democratic party, accusing the men of a "pay to play" scheme involving bribes of $12,000 watches and spa treatment. Langford, elected in March, has earned a reputation for an unorthodox approach to urban revitalization, which has included handing out a $10,000 contract to a 13-year-old girl interested in improving parks. (AP)

Trial opens at 10am today for the high-profile case that pits civil liberty groups against the Bush administration and telephone companies, who are being sued for illegally granting the government access to consumer records. Congress passed a bill in July that would give the businesses immunity, a move prosecutors say is unconstitutional. (Wired)

The indictments brought against Dick Cheney and Alberto Gonzales by a south Texas district attorney were dismissed yesterday on a legal technicality, with the judge ruling that "two alternate jurors had not been properly substituted." Willacy County District Attorney Juan Angel Guerra, who had charges against him for extorting money from a bail bond company and using his office for personal business dismissed last month, had accused Cheney and others of prisoner abuse. The judge issued a warning to Guerra -- who will step down from his post in January -- to be more judicious in his criminal prosecutions. (AP)

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Jury selection began today in the retrial of David Safavian, the Jack Abramoff crony who served as the top procurement official in the Bush White House.

Safavian was convicted in 2006 of obstructing justice and lying to investigators about his work with Abramoff, as well as concealing information about a golf junket he took to St. Andrews, Scotland with Abramoff and convicted former GOP congressman Bob Ney, among others. But that conviction was thrown out on appeal. He was then re-indicted in October, on charges of obstructing justice, lying on a financial disclosure form and providing false statements to various investigators.

The Washington Post reports that, in addition to the standard questions, the judge in the trial today asked potential jurors whether they played any golf. It's unclear whether that would increase or decrease their chances of being picked.

Regular readers may remember that Safavian's alleged love of golf was a major focus of the original trial.

Earlier we noted that, in speaking this morning about Eric Holder, his pick for Attorney General, Barack Obama seemed to go out of his way to suggest that Holder would reverse the politicization of DOJ that we saw under President Bush and Alberto Gonzales.

Holder's own remarks backed up that notion. He said:

It is incumbent upon those of us who lead the Department to ensure not only that the nation is safe but also that our laws and traditions are respected. There is not a tension between those two. We can and we must ensure that the American people remain secure and that the great constitutional guarantees that define us as a nation are truly valued. For example, working with Republicans and Democrats in Congress, should I be confirmed, we look forward to actually structuring policies that are both protective and consistent with who we are as a nation.

And Holder included an interesting hint suggesting that he may be more aggressive than his predecessors under Bush in going after corporate malfeasance -- specifically, one would assume, in regard to the current financial crisis:
National security concerns are not defined only by the challenges created by terrorists abroad, but also by criminals in our midst, whether they be criminals located on the street or in a boardroom.

Holder's full remarks follow after the jump...

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