Business
Bank Bailout: How Was The Money Spent?
Although, hundreds of well-trained eyes are watching over the $700 billion that Congress last year decided to spend bailing out the nation’s financial sector, it’s still difficult to answer some of the most basic questions about where the money went.
Despite a new oversight panel, a new special inspector-general, the existing Government Accountability Office and eight other inspectors general, those charged with minding the store say they don’t have all the weapons they need. Ten months into the Troubled Asset Relief Programme, some members of Congress say that some oversight of bailout dollars has been so lacking that it’s essentially worthless.
“TARP has become a programme in which taxpayers are not being told what most of the TARP recipients are doing with their money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested,” a special inspector-general over the programme reported last month. The “very credibility” of the programme is at stake, it said.
Access and openness have improved in recent months, watchdogs say, but the programme still has a way to go before it’s truly transparent.
For its part, the Treasury Department said it’s fully committed to transparency, and that it’s taken unprecedented steps to report the status of TARP to the public. It regularly posts information on which banks have received money, as well as details about each of those transactions. Further, Treasury said, it doesn’t agree with all of its watchdogs’ recommendations, which it said could hamper the programme’s effectiveness.
TARP was passed in the midst of last fall’s financial meltdown as a way to keep American banks from falling deeper into the abyss.
The programme was controversial from the start. Its supporters say it’s helped spark bank lending in the country, but critics say it’s unfairly rewarded the big banks and Wall Street firms that pushed the economy to the brink.
The programme also has undergone a major transformation. When the Bush administration first went to Congress for the money, TARP’s main purpose was to buy up hundreds of billions of dollars in bad mortgages and so-called mortgage-backed securities that were bought and sold on Wall Street.
Today, TARP consists of 12 programmes that sent those hundreds of billions of dollars to big banks, but it’s also bailed out auto companies, auto suppliers, individuals delinquent on their mortgages, small businesses and American International Group, the big insurance company.
The watchdogs now must oversee the maze that TARP has become.
Just because a lot of people are watching, however, doesn’t mean they get everything they want to see.
One of the most prominent watchdogs is Elizabeth Warren, a Harvard Law School professor who chairs a TARP oversight panel created by Congress.
Her panel has released 10 major reports that examine TARP’s plans and policies, finding that much of the work by the Treasury and the Federal Reserve has been opaque, with unclear or contradictory goals.
One report took Treasury to task for vastly undervaluing more than $250 billion in transactions with the country’s major banks, and another suggested several ways to revamp federal regulation over the financial sector. Other reports have criticised the Treasury for its initial defensiveness in opening its books.
Despite its mandate, however, the panel doesn’t have subpoena power. That means it can ask, but can’t compel, officials from Treasury, the Federal Reserve or the nation’s banks to testify.
Henry Paulson, the Treasury secretary under former President George W. Bush, repeatedly stiff-armed the panel. Timothy Geithner, the current secretary, has been more open, but so far has testified just once before Warren’s group. Geithner is scheduled to appear again in September, and has agreed to do so quarterly, and two other senior Treasury officials also have appeared.
The relative lack of testimony from top officials, however, is one reason why critics of Warren’s panel think it hasn’t delivered on its promise.
In June, in an otherwise mundane congressional hearing, Republican Rep. Kevin Brady of Texas surprised Warren with an aggressive critique of the panel, saying it’s failed to help taxpayers understand what Treasury is doing with the billions at its disposal.
“There’s been very little value that the panel has brought to this issue or even insight on how these bailout dollars have been used,” he said. “I frankly believe at this point, given the reports that we’ve seen again with little value, I think the panel needs to be abolished.”
Warren defended the panel’s work, saying the lack of subpoena power means we “only have the capacity to invite” witnesses.
“So you asked Secretary Paulson in the first month of existence?” Brady asked.
“I believe we asked him repeatedly,” Warren said. “We asked him in our first month, in our second month, in our third month.”
Warren said she took the criticism seriously, dropping by Brady’s congressional office as soon as the hearing adjourned. The two had never met before, she said, and “I was really surprised,” by his comments.
“He said he felt frustrated,” she said. “He wanted us to be even blunter” in the panel’s reports.
Brady amplified his comments in an interview last month, saying that some of the panel’s work seem like a “PR ploy” and that “the moment has passed” for Warren’s group to play the role Congress envisioned.
His feelings have been partially echoed by two other members of the panel, Rep. Jeb Hensarling of Texas and former Sen. John E. Sununu of New Hampshire, both Republicans appointed by congressional GOP leaders (the other three members were appointed by Democrats).
Both have accused the panel of mission creep of straying from the central goal of determining exactly how, and how well, Treasury is doing its job.
Hensarling said that “taxpayers have not received answers as to whether the TARP programme works, how decisions are being made or what the banks are doing with the taxpayers’ money.” While he praises the “very smart people on the panel,” he said too many questions have been left unexplored.
He acknowledges that the lack of subpoena power makes things tough. “But even if we had it, I’m not sure we would have used it,” said Hensarling, who’s pushing to abolish TARP.
The other primary watchdog is Neil Barofsky, a special inspector-general named in November by Bush specifically to track TARP funds. His office does have subpoena power, and a growing staff that’s expected ultimately to have 160 people pursuing audits and criminal investigations.
It’s also made a series of recommendations to the Treasury, asking that it do more to reveal how TARP money is being spent. Treasury has adopted some of its recommendations, but rejected others including one of the most important: Giving taxpayers precise details on how TARP funds have been used by banks.
The recommendation involves one of the most visible aspects of TARP: investing $218 billion in 650 banks, helping them to strengthen their balance sheets and boost lending to American businesses and homeowners.
Barofsky’s office has long advocated that the Treasury require banks to detail how the TARP money they’ve received has been used. The department has refused, saying that once an investment is made in a big bank, it’s not possible to track how it’s used.
Barofsky’s office rejected that assertion, and did its own survey of 360 institutions, finding that most could say how they’d used the money.
“Treasury’s reasons for refusing to adopt this recommendation have been squarely refuted by the inspector general,” his office reported to Congress.
Business
Redeployed Customs Officers Assume Office At New Posts
Redeployed Zonal coordinators and controllers affected by the recent swapping exercise in the Nigeria Customs Service (NCS) have since taken over their new posts.
Assistant Comptroller General and Comptrollers affected by the change of batons have gone into action in the respective Zones and Area Commands respectively.
As at Press time, ACG Bello Jibo, the new Coordinator, Zone A, has begun to hold forth at the Harvey Road Zonal Headquarters in Yaba, Lagos.
Comptroller Dera Nnadi, Jaiyeoba, and Shuaibu have resumed their duties as Customs Area Controllers of Tincan Island Port, Apapa and Idiroko Commands respectively.
Comptroller Timi Bomodi has also begun overseeing customs activities at Seme-Krake Border Command.
In an exclusive chat with The Tide, Chairman, Seme Chapter of the Association of Nigeria Licensed Clearing Agent (ANLCA), Chief Oyekachukwu Ojinma (aka Sule) described the outgoing Controller of the Command, Comptroller Dera Nnadi, as a very hard-working and dedicated man, while welcoming the new Customs Area Controller to the border post.
The ANLCA Chairman expressed his wish for a successful tenure of office for Compt. Timi Bomodi.
By: Nkpemenyie Mcdominic, Lagos
Business
‘Electricity Act Will Transform Power Sector’
Minister of Power, Adebayo Adelabu, has stated that the recently signed Nigerian Electricity Act, 2023, will play a fundamental role in transforming the power sector.
According to him, it will unlock the potential of the energy mix and promote the integration of renewable energy technologies into the grid system.
Speaking at the ongoing Nigeria Energy Conference and exhibition in Lagos, Adelabu said the Act aims to create an environment that supports sustainable growth and investment in the power industry by focusing on accelerated private investment and the promotion of renewable energy sources.
“As a game-changer that reformed the NESI, the Electricity Act will, undoubtedly, engender increased access to electricity and regulatory oversight, clean energy transition, improved service delivery, and infrastructural developments.
“In particular, the act will stimulate economic growth by creating a conducive environment for investment and competition. It will generate job opportunities, encourage entrepreneurship, and attract foreign direct investments”, he said.
The Minister called on operators in the power sector to intensify their efforts towards improving communication with the general public, emphasising that the Nigerian masses have a lot of roles to play in safeguarding power infrastructure.
He said issues such as vandalism, passing of meters, and damage to TCN and DisCo infrastructure must be addressed holistically to make significant gains in the power sector.
Adelabu emphasised that the power sector is a cornerstone for economic growth in the country and that the gains made over the years in the power sector can only be consolidated by unlocking equity investments and funds for power development.
He said: “Of course, a lot of investment is required in the power sector. In three weeks, I’ve seen humongous investments that have come into this sector.
“But what are the steps that are required for those investment opportunities to reap the benefit of those investments, additional investments in the form of equity and capex need to come into this industry.
“The power sector is not an industry for short-term players to invest in less than two to three years and expect to make maximum benefits.
“The industry requires medium to long-term investments. Investors must understand that the moment we can break even, we will start making profits in the power sector.
Adelabu also urged operators in the NESI value chain to improve their service delivery, adding that Nigeria’s energy expansion plan of 60,000 Megawatts by 2060 is an achievable target.
He, therefore, called on gas companies, GenCos, TCN, and DIScO to showcase their success stories in generating and transmitting power to the last mile that pays for all the segments of operators in the value chain.
Business
‘Nigeria Loses $1.5bn Annually To Malnutrition’
Minister for Budget and Economic Planning, Abubakar Bagudu, has said Nigeria loses $1.5 billion of its Gross Domestic Product (GDP) annually due to micronutrient deficiencies.
Bagudu therefore called for coordinated efforts to ensure a swift response with expected positive outcomes.
A statement released by the Ministry said the Minister disclosed this, last Tuesday, while speaking at the 53rd Annual General Meeting and Scientific Conference of the Nutrition Society of Nigeria in Abuja.
In the statement, Bagudu noted that the government was determined to tackle malnutrition through the inclusion of nutrition in the National Development Plan, and the Nigeria Agenda 2050.
“It is also a commitment to achieving optimal nutrition status for all Nigerians with particular attention to the vulnerable group as highlighted in the National Multisectoral Plan of Action for Food and Nutrition”, he said.
Bagudu, who urged experts in nutrition in the country to research and develop innovations that will boost nutrition, explained that doing this “would contribute towards achieving Sustainable Development Goals (SDGs), ensuring Universal Health Coverage, and bringing about significant positive changes in the nutrition sector in Nigeria”.
He told members of the Nutrition Society of Nigeria “to prioritise innovation and research in the field of nutrition towards the attainment of Sustainable Development Goals, Universal Health Coverage and transformation of the landscape of nutrition in Nigeria.
“Nigeria currently requires nutrition professionals who have extensive knowledge, good communication skills to address nutrition education, emotional intelligence as well and a good understanding of self-motivation and drive to address nutrition dynamics”.
The Minister urged the NSN to embrace technology, leverage digital solutions, and invest in research and development to find sustainable and scalable solutions to Nigeria’s nutrition challenges.
He assured members of the NSN that his ministry would strengthen coordination and provide the required leadership for the nutrition sector.
The Kwara State Governor, AbdulRahman AbdulRasaq, in his goodwill message, said the Nigerian Governors’ Forum (NGF) had identified areas of key commitments for the realisation of a healthier citizen and country, including increasing budgetary spending on nutrition and strengthening the nutrition profile.
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