Experts Weigh In on Execution and Oversight of the Federal Bailout

“Where will the bar be?” asked Damon Silvers. “When that part of our nation that brings out the punch bowl and is getting the party going again to bail out the rich and leave the poor to suffer, where will the bar stand on that?” he asked.

Silvers is deputy chairman of the five-member Troubled Asset Relief Program Congressional Oversight Panel, appointed in November as a watchdog over federal programs to stabilize and restore the United States economy.

In Thursday’s “Managing the Bailout: Execution and Oversight of the Federal Response to the Financial Crisis,” Silvers chronicled the panel’s review of U.S. Treasury Department decisions through 2008. He and other panelists later discussed regulatory strategies for the future.

Opening the program just 11 days after stepping down as general counsel of the Treasury Department, Robert F. Hoyt related the 2008 chronology of the financial crisis. He said the Treasury’s responses to daunting challenges under immense time pressures and amidst uncertainty about the character of the problems drew praise from the public, but also criticism, which led to proposals for regulatory reform.

Thomas McCool, director of the Center for Economics at the Government Accountability Office, listed concerns about organization, management, staffing, contracting, and most importantly, he said, internal control systems under TARP.

William F. Kroener III, co-chair of the ABA Task Force on Financial Markets Regulatory Reform, said the association group will take a long view of reform.

Prof. Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University School of Law, cited public outrage over executive compensation and corporate management that overvalued its assets, especially now that this same management wants the government to purchase those assets in another bailout. According to Hurley, there should be a third-party review of bonuses given to management and whether these bonuses were deserved, and make managers give the money back or get out.

To do oversight going forward, panelists offered a laundry list to ensure monitoring: checks and balances, systematic regulation and structural changes to separate consumer product disclosure regulation from financial stability regulation.

Materials for the Thursday program are available online here. The program was sponsored by the ABA Section of Administrative Law and Regulatory Practice, with the Section of Business Law and the Rappaport Center for Law and Public Policy at Suffolk University Law School.