It shouldn't surprise anyone that the TARP is shot through with holes, that it lacks critical oversight, that its rationale has changed since its inception. There is a correlation between nubility and confusion. And there is a tradeoff between oversight and efficiency. Oversight, such as it is, can be formal, as in inspectors general or congressional hearings. But these institutions aren't built to function rapidly.
Yes -- the Fed/Treasury have been changing their policy as conditions seemed to warrant. No one really knew at the beginning what it would take to unlock the credit markets, or how much money it would cost to essentially recapitalize the banks. A lot of tough calls were made, and with them came many mistakes, both in execution and in communication. (Should Lehman have been saved by the government? Who first called it a "bailout"? Etc.)
Here's the thing, though: in a crisis like this, maybe want policy makers to admit their mistakes quickly. We want flexibility. That's not messing things up. That's making things work. A smart economist type pointed out to me that everyone and their brother thought the crisis would lead to a run on the dollar, and so a lot of the "canned" policy prescriptions would have centered around that. That didn't happen. Now, the Feds have more liberty to be creative. They're still a bit shy about it because the political environment is toxic: populist calls for tougher oversight mechanisms, the presidential transition, the administrative burdens are all factors.
Meanwhile, House Republicans sent a letter today to Fed chairman Ben Bernanke and Treasury Secretary Hank Paulson (I don't know him well enough to call him "Hank," but..) demanding answers to the following questions. All seem valid...
1. What is your exit strategy for the government's sweeping involvement in private business?
2. If given the authority for the additional $350 billion of TARP funding, what is your strategy for maximizing its effectiveness?
3. With regard to the various lending facilities established by the Federal Reserve since the financial crisis began, how will you provide greater transparency about loans, the collateral, the risk, the kinds of institutions involved, and the realistic expectations for repayment?
4. Recognizing that you are unwilling to disclose the identity of the institutions accessing the Federal Reserve's lending facilities for fear of stigmatizing those firms, what is the reason for your unwillingness to provide general, non-institution specific information about the terms on which the loans are being made and the types of collateral being pledged?
5. Have the government's actions to date - including capital injections under the TARP and the trillions of dollars of assets that the Federal Reserve has taken onto its balance sheet - resulted in increased lending and improved economic conditions?
6. In making your recent decisions regarding which firms are too big or too interconnected to fail (Bear Stearns, AIG, Citigroup) and which are not (Lehman Brothers), what standards or principles of general application have guided your judgments? What assurances can you offer American taxpayers that their government is not simply engaged in an exercise of picking economic winners and losers?
7. Why has the Treasury Department not made use of the insurance option that was developed by the Leader's Working Group, led by Representative Cantor, and included in the final TARP legislation to ensure at least part of the relief effort is funded by Wall Street and not Main Street?
| 
