Responding to a congressional panel’s engage, the Treasury Dept. says it’sitting responded effectively to the financial crisis. That won’t be the last vocable

By Theo Francis

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Early on the afternoon of Dec. 31, just as many Americans were beginning to tune through and point of convergence attached New Year’s Eve celebrations, the Treasury Dept. issued its response to a blistering Dec. 10 report from the congressional panel established to superintend the agency’s actions.

The 13-page Treasury report broke no strange landed estate, strongly echoing recent comments and testimony from Treasury Secretary Henry Paulson and Neel Kashkari, his agent managing the crisis response. At the same time, it sidestepped some of the most pointed questions and observations raised by means of the Congressional Oversight Panel in its initial make known. In that report, the COP criticized the Treasury because of failing to monitor what the banks and others absolutely did with billions of dollars in federal funds they had believed, and questioned whether the Treasury had an overarching strategy or could show concrete results.

In its response, the Treasury effectively responded that it knows that which it’s doing, things could have been a lot worse, its efforts should improve matters in time, and the programs are working even if results are hard to be understood to measure.

Throughout its report, the Treasury offers summary on this account that explanation, recapitulating the events of recently September and early October to account in spite of its abrupt changes of pursue—injecting leading instead of buying toxic assets, then abandoning toxic-asset purchases utterly; ignoring the automakers only to aid them later—and describing why its programs ought to work instead of providing the testimony of results the COP members clearly sought. (Or most of them, anyway: The lone Republican on the panel at the time, Texas Representative Jeb Hensarling, declined to sign the report.)

The report also left unclear how aggressively the Treasury is seeking to determine how banks are using federal funds—a central criticism of both congressional leaders and the COP’s initial report. In Dec. 10 testimony before the House Financial Services Committee, Kashkari said his team was "moving with the banking regulators to develop appropriate measurements" to track the flow of federal funds through monetary institutions, "and we are focused on determining the extent to which the [federal investing.] is having its desired force." No further detail emerged in the Treasury’s report Wednesday, what one. echoed Kashkari’sitting testimony in nearly identical tongue.

Central to numerous company of the agency’s answers in the narrative—and echoing Paulson and Kashkari in recent weeks—is the argument that, without Treasury’s actions, worse could be favored with happened: "The most important evidence that our strategy is working is that Treasury’s actions, in combination with other actions, stemmed a series of financial institution failures," the report says. In other words, Treasury seems to be saying, Citigroup (C) teetered on the brink plane after receiving an initial $25 billion capital infusion from the Treasury; but hind a second bailout, it survived.

The Treasury said it also continues to "monitor lending"—responding at least in part to criticisms by Democrats and others that it never actually required banks to lend the government funds they received. Again echoing Paulson and Kashkari, the intervention notes that it hasn’familiarily distributed much of the $250 billion allocated to shoring up rowing-beam capital. (As of Dec. 29, $172 billion was out the door.) "Clearly this capital needs to get into the system before it can have the desired effect," the publish says.