Treasury's no-bid deals for banks get flak on Capitol Hill

The Treasury Department’s practice of offering billions of dollars in no-bid contracts to banks for government services is drawing flak on Capitol Hill.

Several lawmakers are separately criticizing the Treasury for the deals that critics of the system say have exposed poor and elderly Americans to fraud and potentially wasted tens of millions of taxpayer dollars.

The agency’s inspector general has launched multiple audits of the deals and is planning more for next year.

Senators representing three committees have complained, in separate letters sent this winter and spring, that the contracts are awarded in an opaque and arbitrary manner, blocking efforts at congressional oversight. Treasury responded with assurances that the banks are selected carefully and the programs are efficient, yet it has not provided documents or responses to satisfy any of the three letter-writers.

“In a no-bid process the risk that the American taxpayer will not receive the best deal is heightened,” wrote Sen. Charles Grassley, R-Iowa, this month.

The Center for Public Integrity published a series of stories about the no-bid deals, which Treasury awards under an obscure, 150-year-old law giving it the authority to hand-pick banks as “Financial Agents” and pay them for work that the government might otherwise do itself.

Related: How Bank of America and JPMorgan locked down a captive market

There’s more to this story. Click here to read the rest at the Center for Public Integrity.

This story is part of Finance. The latest investigations about U.S. financial reform, corporate accountability and consumer finance. Click here to read more stories in this investigation.

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Copyright 2014 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.