The cacophony about using taxpayer money for bailouts is getting increasingly loud in the US, with people, media and advocacy groups starting to ask for information on how exactly banks are using their hard-earned, well-paid taxes to throw lifelines at what is deemed to be "important" to the national economy.

According to a report in the Denver Post, the US house financial services committee is set to hold an important hearing in early January 2009 that will mull the future use of the Treasury Department's $700-billion bailout for financial institutions and banks.

The Denver Post says that the committee needs to demand "heightened transparency" pertaining to all future allocation of funding from the Troubled Assets Relief Program, better known by its acronym – TARP.

The report says that till now, around half of the estimated $700 billion has been released to the Treasury Department by Congress, and that in the initial phases of the bailout news agencies, consumer advocacy groups and private citizens were not able to distinguish where all the money was being dispersed.

Public pressure has virtually forced the Treasury Department to make public a list of financial institutions that have been handed out the dole by the government.

Now, the din about this sort of "obstruction" of information is becoming louder, as it is argued that bailouts, having been funded by taxpayer dollars, practically mandated that the general public has a right to know on how it is spent.

This stems from the fact that earlier in the year, US President George W Bush, and Barack Obama, then a Democrat senator and now president-elect, painted a doomsday scenario if TARP was not passed.

The American people were told that TARP was basically a plan to let the Treasury Department to buy up billions of dollars in bad mortgage debts and distressed stocks that were killing the credit market and the economy.

However, the report says that since the passing of legislation treasury secretary Henry Paulson has deviated from this course of action, investing directly instead in financial institutions, which has made the "administration's silence even more disconcerting."

The list released last week finally put out names of the beneficiaries thus far of funds from the TARP program, including JPMorgan Chase ($25 billion), Citigroup ($45 billion) and Bank of New York Mellon ($3 billion). Forty-nine smaller banks were to get another $2.8 billion.

The house financial services committee chairman Barney Frank is now writing legislation, which mandates that bailout money be spent on specific financial help like foreclosures and reducing mortgage rates.

Advocacy groups are now reported to be saying that there is little way of knowing how much support, if any, the initial $350 billion from TARP spent by Paulson has provided to the shaky US economy, as there was a widespread lack of information about how the funding has been used thus far. They are now asking that till more is revealed about what happened to this $350 billion, Congress should not hand out another dime.

Undue secrecy
Earlier this month Bloomberg News filed a suit in a New York court under the 'US Freedom of Information Act' against the US Federal Reserve after it refused to disclose the names of those it has loaned money from the over $2 trillion emergency bailout funds set up from US taxpayer's money.

Bloomberg has also filed to force the Fed to disclose the nature of assets it has accepted from these borrowers as collateral (See: Bloomberg sues against Fed's non-disclosure of lending details).

Last week, reports in the media said that the Associated Press brought to light this oversight and lack of transparency, after contacting 21 banks that had each received at least $1 billion from the TARP fund. It asked them how they spent the TARP money, and what their plans were for it going forward. Reports said that none of the banks offered specific answers, while a few offered the standard PR boilerplate of "strengthening our balance sheets and making more loans".

Most gave reporters a brush-off, reports said. That was when it was found that there were no requirements for disclosure for any of the banks to inform the public on the utilisation of TARP funds.

Reports also said that the government accountability office had reported earlier in the month that despite assurances from Paulson and the congressional negotiators who authored the TARP legislation, the bill did "not require that the institutions track or report how they plan to use, or do use, their capital investments."

Apparently, humiliation is the only route the Congress can take to elicit any accountability from bank officials. That comes in the form of making them testify before a congressional hearing, which is now set for January 2009, when lawmakers come back to work after the holiday season.

Apparently, advocacy groups, journalists and the American public have woken up to the fact that assurances from the White House and the Democratic congressional leaders about significant oversight and transparency going hand in hand with sweeping powers to the Treasury was mostly hullabaloo, and the much-promised accountability never materialised.

Reports also said that it could well be possible that the TARP barely halted the financial haemorrhaging, despite all the cash and other liquidity that was poured into the markets by the Federal Reserve and central banks in other nations.

With President-elect Obama's administration penning a legislation that might just surpass TARP's $700 billion price tag, the call is now for Congress to kill the TARP program before any more funds are released, and any new interventions to be governed by new legislation that explicitly states how recipients would account for subsidies received.