DEFINITION of Congressional Oversight Panel - COP
Congressional Oversight Panel - COP is a panel created by the U.S. Congress in 2008 to oversee for the U.S. Treasury's actions aimed at stabilizing the U.S. economy. The Congressional Oversight Panel (COP) was empowered to review official data and hold hearings in order to develop reports to assess the effect of the Treasury's actions on the economy.
BREAKING DOWN Congressional Oversight Panel - COP
The COP was also instructed to review the state of the financial system and evaluate the regulatory system's effectiveness in overseeing financial markets and protecting consumers. The creation of the COP was in conjunction with the creation of the Office of Stabilization (OFS) within the U.S. Treasury, that was used to implement $700 billion of Federal spending through the Troubled Asset Relief Program (TARP).
The panel was formed during the financial crisis that was the worst since the Great Depression. The panel ceased operations in 2011 and issued its final report on the government's efforts to emerge from the severe economic downturn and restore order and liquidity to the credit and debt markets.
The Federal Reserve chairman at the time, Ben Bernanke, said that when the TARP was created in late 2008, the nation was on course for "a cataclysm that could have rivaled or surpassed the Great Depression," the report noted. This fate was avoided partly because TARP provided critical support for markets at a time of great upheaval. "Even so, the program leaves behind a troublesome legacy: continuing distortions in the market, public anger toward policymakers, and a lack of full transparency and accountability," the report stated.
TARP was initially created to increase the liquidity of the secondary mortgage markets by purchasing the illiquid Mortgage-Backed Securities, and through that, reducing the potential losses of the institutions that owned them. Later, it was modified slightly to allow the government to buy equity stakes in banks and other financial institutions. TARP initially gave the Treasury purchasing power of $700 billion to buy illiquid MBS and other assets from key institutions in an attempt to restore liquidity to the money markets.
TARP had cost taxpayers $25 billion by 2011. The report stated that TARP distorted markets by exacerbating "too big to fail" - rescuing Wall Street banks from the consequences of their own actions - and magnifying moral hazard. In addition, in what the report called perhaps the "most profound violation of transparency," the Treasury decided at the onset of TARP to push tens of billions of dollars out to very large financial institutions without requiring banks to reveal how the money was used. "As a result, the public will never know to what purpose its money was put."