On Wednesday, the Senate unanimously passed an oversight bill sponsored by Senator McCaskill.

“Let me be clear. The taxpayer money that is being used is not a ‘bail out’, but a crucial investment.  The American people entrusted Congress with their money and we are loaning and investing it in order to keep our economy afloat. Bottom line – we need to make sure we get this money back and the only way we can do that is with strong oversight on how this money is spent. This bill gives the inspector general the authority he needs to make that happen,” McCaskill said.

The legislation:

• Makes clear Special IG [Inspector General] has authority over ALL actions taken under the relief plan.
• Gives IG the authority to hire auditors quickly by granting him temporary hiring authority.
• Requires the Treasury Secretary to explain to Congress why any IG recommendations are not implemented.
• Requires that the IG issue a report in July of 2009 to Congress analyzing how the program’s funds have been spent to date.  The report will also be made public and posted on the Internet within 24 hours of its release.
• Makes the funds for the Office of the Special Inspector General available immediately to allow IG to set up his office.

The bill is a start, but it’s a baby step. Any time the Senate votes yes unanimously on something, just assume it’s bland.

Now we need to get specific about what the IG will look for. Thursday on Fresh Air, Teri Gross interviewed the chairman of the Congressional Oversight Panel for–excuse my terminology–the “bailout”. Elizabeth Warren was full of good information, but I was especially interested in this part:

One of the areas that I’m interested in is that we are recapitalizing the banks. What it means is we’re putting a lot of money into these banks, who apply for it. And yet so far as I can tell–I want to put this in the form of a question–there don’t seem to be any restrictions on any of the banking practices. So, you know, if these are banks that are raising their rates on customers for no reason at all, that are engaging in lots of tricks and traps pricing that you and I have talked about in the past, there’s no statement that if we give you this money, that taxpayer dollars are not supposed to be used to subsidize lousy practices that prey on American families.

Similarly, we haven’t asked, “What are you going to do with this money?” So, there are small businesses out there that are literally starving to death, because they can’t get money. I’m talking about, you know, triple A rated folks who’ve got great credit, who have long relationships with their banks. And they’re simply told, “Sorry, we’re not lending it out. We’re keeping it in our vaults.

Now, I think that if we’re going to put money in the banks, with the notion that those banks are then going to lend it out and that’s what’s going to keep the wheels of commerce turning, then we ought to be accounting for that money. We ought to see to it that the money is in fact moving out in the forms of loans, good loans to small businesses.

You know I want to point out–this is not crazy–that the British put money into their banks, and they just made it an explicit term that, you know, you can have this taxpayer money, our taxpayer money, to make your banks stronger; but in return, you have to agree that small and mid size businesses get a certain amount of loans. And  we’ll compare your lending portfolio today with what it was a year ago, and if we’re not seeing taxpayers’ money used in a way that helps commerce, then you’re not getting it. It’s … it’s that kind of accountability that the Congressional Oversight Panel is going to ask for.

Requiring such accountability would be a giant step.