The law and accounting firms retained by the Treasury Department to help administer the $700 billion financial bailout have clients who received the federal money, according to a report in USA Today.
According to the report, Treasury has dispersed about $4.1 million to date to four law firms to help engineer bailout investment agreements. Meanwhile, Treasury is also paying an undisclosed some to two accounting firms to help the agency to create bailout internal financial controls.
“The government needs to call on those with experience, but those with experience may have had a significant hand in creating the problem and may not have unclouded judgment,” Elizabeth Warren, a Harvard University law professor and head of the bailout’s Congressional Oversight Panel, told USA Today.
Warren added. “Worse, those who offer advice may profit from the very advice they give.”
But the Treasury Department has been quick to defend its hiring of the firms.
Spokeswoman Jenni Engebretsen explained that Treasury needed to emplyo advisers familiar with the financial instruments involved.
“It is essential to hire firms that have expertise in the types of investments Treasury is making, so it is natural to expect they would have done this type of work in the past,” Engebretsen said.
Meanwhile, the Government Accountability Office (GAO) had questioned Treasury’s hiring policies in a report it issued last month. One conclusion in that report was that the agency had in place no comprehensive plan to monitor conflicts of interest.
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