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RENEE MONTAGNE, host:

The financial turmoil in this country began with the housing crisis. And home foreclosures are on the mind of the woman we'll meet next. Elizabeth Warren chairs the congressional panel that monitors how the government is spending its $700 billion bailout package. Today her panel will be in Las Vegas which sits in the county and state with the highest foreclosure rates in the country.

Professor ELIZABETH WARREN (Chairwoman, Congressional Oversight Panel): You know, the foreclosure crisis really is at the heart of the economic meltdown. And we've allocated $700 billion to spend. And the real - one of the real questions we're asking here is whether or not any of that money is in any way helping end the mortgage crisis.

MONTAGNE: So far, is the government's bailout money reducing foreclosures anywhere as far as you can observe?

Professor WARREN: Not as far as I can observe, no.

MONTAGNE: And reasons for why or why not at this point?

Professor WARREN: The money is being put into banks, but it's being put into banks with no restrictions. So by and large the banks can do what they want. Use the money to acquire other banks or they can just stuff the money in their vaults and hang onto it.

MONTAGNE: All of which I gather banks are doing.

Professor WARREN: There is some evidence of that. So it means that none of the money is being necessarily pushed out into lending, you know, make lots of loans to small businesses and help people refinance their homes and so on. Frankly, it doesn't do us a whole lot of good to have banks with vaults full of money if people can't get car loans, can't refinance their homes, can't get small business loans to keep the economy moving forward.

MONTAGNE: Well, you know, in terms of where the money might be going, President Bush has been talking about using some of these funds, directing them to Detroit, to the Big Three carmakers. Is there any reason that this can't be done?

Professor WARREN: Well, if we want to look at how the money has been spent over the last two months, the Treasury has taken the position that it can pretty much spend the money in any way it wants. You know, it's announced one plan, failed to do that, gone in a different direction. There doesn't appear to be a great deal of statutory constraint on how Treasury could use this money.

MONTAGNE: So the answer is it looks like the secretary of the Treasury can do pretty much what they want.

Professor WARREN: I think the way to say it is they have been doing pretty much what they want. So the real question is to put their feet to the fire about whether or not they have a good plan for spending taxpayer dollars.

MONTAGNE: Does your panel have any leverage over this?

Professor WARREN: We have the power of the cranky question. Now, let's face it. Most of the $350 billion has already been committed, but Treasury may want that second $350 billion. And to do that they have to come back to Congress. We now have a list of questions. What accountability is there for how the banks are using this money? What are you doing to help in the foreclosure crisis? But I will be clear. Our power is only the power of the soapbox to say these are the questions Treasury should be answering.

MONTAGNE: Would it be fair to say then that for the first half of the money, there was functionally no oversight, which has given rise to the kinds of questions that will create oversight for the second half of the money?

Professor WARREN: There has been shockingly little oversight of the money. That is the conclusion of the GAO.

MONTAGNE: The Government Accountability Office.

Professor WARREN: Right. They pointed out that basic mechanisms are not in place to track the expenditure of these funds. And the Congressional Oversight Panel basically picks up where GAO leaves off and asks some of the bigger questions - how this is supposed to help the economy, how this is supposed to help America pull itself out of this economic crisis.

MONTAGNE: Elizabeth Warren is a professor at Harvard Law School. She chairs the Congressional Oversight Panel which monitors how the government spends the $700 billion bailout fund. Thanks very much for joining us.

Professor WARREN: Thanks for having me.

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