TARP, a Congressional Failure?
The Troubled Asset Relief Program (TARP) is one of several major financial interventions in the economy undertaken by the federal government since the fall of 2008. Policy Analysis #660, released last Thursday by the Cato Institute, argues that the $700 billion Troubled Asset Review Program (TARP) is a Congressional failure. Written by John Samples, director of the Institute’s Center for Representative Government, the executive summary introduces the paper this way:
“The U.S. Constitution vests all the "legislative powers" it grants in Congress. The Supreme Court allows Congress to delegate some authority to executive officials provided an "intelligible principle" guides such transfers. Congress quickly wrote and enacted the Emergency Economic Stabilization Act of 2008 in response to a financial crisis. The law authorized the secretary of the Treasury to spend up to $700 billion purchasing troubled mortgage assets or any financial instrument in order to attain 13 different goals. Most of these goals lacked any concrete meaning, and Congress did not establish any priorities among them. As a result, Congress lost control of the implementation of the law and unconstitutionally delegated its powers to the Treasury secretary. Congress also failed in the case of EESA to meet its constitutional obligations to deliberate, to check the other branches of government, or to be accountable to the American people. The implementation of EESA showed Congress to be largely irrelevant to policymaking by the Treasury secretary. These failures of Congress indicate that the current Supreme Court doctrine validating delegation of legislative powers should be revised to protect the rule of law and separation of powers”
Taxpayers can find additional information about TARP, and TARP-related facilities, in U.S. General Accountability Office report (number GAO-10-25) (requires Adobe) released this month. In the report, GAO says the Department of the Treasury “needs to strengthen its decision-making process on the term asset-backed securities loan facility. The Office of the Special Inspector General for the Troubled Asset Relief Program also provides access to helpful reports and other information about TARP. We growled about TARP (here).
