With the federal government on the hook for as much as $1trillion in various rescue plans aimed at stabilizing the nation'sfinancial system and stimulating economic growth, elected officialsand taxpayers need to know how these funds are beingspent–including state insurance commissioners.

Are the rules governing these initiatives clearly spelled out?Are they being followed? Are programmatic goals being met? Arethese programs being administered in an equitable and effectivemanner? And how do we, or will we know?

What began as a mortgage crisis has now spread to several othersectors of the economy–including the automobile industry, collegesand universities, and many other entities.

Insurers, of course, are affected and are participating in therescue plans. AIG may be the largest recipient of federal largesse,but more carriers may be receiving aid soon.

State insurance commissioners may well be called upon to assureaccountability in the expenditure of taxpayer dollars that aretargeted to various public policy objectives. Hopefully, they willdo a better job than federal agencies appear to be doing.

The Government Accountability Office has released areport–”Troubled Asset Relief Program: Additional Actions Needed toBetter Ensure Integrity, Accountability, and Transparency”–whichraises serious questions regarding the integrity of the mostsignificant rescue plan that has been launched in response to thegrowing economic crises that now affect far more than just lendinginstitutions.

Although acknowledging the complexity and scope of a programthat existed for less than 60 days at the time of its assessment,GAO expressed concerns with the quality of the government'soversight and questioned whether banks were complying with therules pertaining to executive compensation.

Many scholars, op-ed columnists and consumer advocacy groupshave questioned the fundamental goals of TARP and other rescueplans, asserting that too much attention is being paid to helpingout large institutions (often precisely according to the logic thatthey are “too big to fail,” and then creating more suchinstitutions), while ignoring the financial disasters that arestriking many working families struggling with troubledmortgages.

Fair-housing groups have noted that the subprime lending at theroot of these problems reflected long-standing, raciallydiscriminatory practices that for decades denied credit to minoritymarkets and then targeted them with predatory products thateventually led to record foreclosure rates, declining propertyvalues and tax revenues, cuts in essential public services, andother severe community costs.

The GAO report calls for the Treasury to take steps “aimed atimproving the integrity, accountability and transparency of TARP.”Specifically, GAO calls for Treasury to:

o Assure that rescue funds are being used in ways that areconsistent with the goals of the program.

o Communicate with Congress and the public regarding programactivities.

o Hire and train a sufficient number of personnel to adequatelyoversee performance.

o Develop a system for managing potential conflicts ofinterest.

State insurance commissioners need to be prepared to takesimilar actions, and more, as additional insurers participate inthese initiatives. What must they do?

o Clear regulations need to be spelled out so that electedofficials and taxpayers understand how public funds are being spentand how effectively public policy objectives are being met.

o Effective monitoring procedures need to be set in place sothat programs can be evaluated and, where necessary, modified on atimely basis.

o Implement these bailout programs on an equitable basis toassure that no unfair discrimination occurs in spending thesepublic funds or in the activities of recipients in general.

Assuring such accountability requires far greater transparencythan currently prevails.

Equity concerns have received the least attention as theeconomic crisis has increasingly dominated the news. But these arenot “back burner” issues to be addressed once the “larger” problemsare resolved. They need to be addressed as part of the economicrecovery process.

There are specific steps the National Association of InsuranceCommissioners and individual state regulators can take to assuresuch equity.

Home Mortgage Disclosure Act-like accounting of where policiesare being written, as well as paired-testing, are two criticaltools that state insurance commissioners need to develop–orcontract out–so that equity becomes a central piece of theaccountability that should be demanded of all insurers.

(For further details on these tools, see “More TransparencyNeeded In Sale Of Homeowners Insurance,” on page 34 of NU's April21, 2008 edition, as well as “States Need More Data To Stop UnfairDiscrimination,” on page 34 of NU's Sept. 15, 2008 edition.)

To paraphrase an often-quoted observation, if there is nojustice, there will be no recovery.

Integrity, accountability and transparency are vital to thenation's economic recovery efforts. State insurance commissionerscan be in the position of showing the way for the entirenation.