In this hard-hit corner of the nation’s mortgage meltdown and credit crisis, it’s hard to find anybody who sees evidence that the Treasury Department’s $700-billion rescue plan is working after two months.
In the first public hearing of the Congressional Oversight Panel -- a three-member board mandated to keep close watch on the bailout program enacted in October -- economists, local bankers, beleaguered homeowners and government officials said here Tuesday that the billions of dollars paid out by Washington to the banking industry were not filtering down and that Nevada’s desperate condition was growing worse.
Clark County has the nation’s highest foreclosure rate. Unemployment has jumped above 7% and lines for free food at charity centers are growing.
“It is a sad day when a child writes to Santa that all she wants for Christmas is food,” said Julie A. Murray, who operates the Three Square food bank.
She was one of the approximately 150 people who attended the hearing on the campus of the University of Nevada, Las Vegas.
The government’s solution to the crisis was to bolster the nation’s banking system by handing out about $250 billion to scores of banks.
But “there is little evidence of what effect these billions of dollars are having on us,” said Elizabeth Warren, the Harvard University law professor who chairs the panel.
Warren has repeatedly asked Treasury Department officials for an explanation of their strategy and how the bailout is supposed to help solve the credit crisis, but so far her panel has not received any answers.
The same issues are being raised by the Government Accountability Office and Treasury Department Inspector General Eric Thorson.
Democrat Harry Reid of Nevada, the Senate majority leader, said at the hearing that major banks were failing to increase lending, despite getting most of the first $350 billion allocated.
“It is just not helping at all,” Reid said.
Before Congress gives the Treasury approval for the second $350 billion of the rescue plan, Reid said in an interview, he intends to tighten restrictions on how the money is spent.
The senator said he intended to make sure that additional spending is targeted to help families in foreclosure. Reid said the exact plan will depend on recommendations from Warren’s panel, which is supposed to provide monthly reports to Congress and advise it on regulatory reforms.
In a later interview, Warren said the Treasury Department should have a lot of leverage to compel banks to do more, given that taxpayers have handed over billions of dollars and in many cases are now shareholders.
“If the Treasury cannot devise a program that moves money into the economy, then they are failing in their mission,” Warren said.
Although criticism of the Troubled Asset Relief Program, or TARP, is growing in Washington, the hearing Tuesday was the first attempt to gather information from one of the communities most deeply troubled by the credit crisis.
“Our economy has gone from the fastest-growing in the nation to among the worst,” said George Burns, commissioner of Nevada’s Financial Institutions Division.
R. Keith Schwer, a University of Nevada economist, projected that the state’s unemployment rate would surpass 10% next year and that conditions were continuing to deteriorate as the tourism and building industries sink.