With the unpopular bank bailout, the Troubled Asset Relief Program (TARP), coming to a close, policymakers should begin looking back at the program to glean lessons from its creation and execution. When TARP was created by an act of Congress in 2008, the imperative was speed, not transparency. Unfortunately, that lack of transparency and other problems plague the program nearly two years later.

Lesson 1: Create an explicitly independent inspector general.

Probably the easiest problem to fix, as far as future bailout legislation is concerned, is that TARP did not specifically state that its oversight body, the Special Inspector General for TARP (SIGTARP), would be independent from the Department of the Treasury (Treasury). While it is unclear if Treasury ever acted to control SIGTARP or curtail its independence, SIGTARP's relationship with Treasury was a contentious issue for several months in the summer of 2009, as SIGTARP was beginning its investigations. At best, TARP's silence on the issue distracted from both TARP's and SIGTARP's missions and hampered transparency. This problem would be easily fixed with a short section acknowledging any future oversight body's independence.

Lesson 2: Establish a recipient/participant reporting mechanism and clear disclosure requirements.

A second, more difficult problem that should be addressed in any future bailouts is a hot-button issue in the transparency community in general: recipient reporting. TARP specifies very little in the way of disclosure, instead leaving it up to the Treasury Secretary to decide how, what, and when to disclose. For instance, while the Secretary chose to identify TARP recipients by name, the TARP legislation merely requires that the Secretary publish a "description" of what is purchased. When compared to landmark federal transparency laws such as the Federal Funding Accountability and Transparency Act (FFATA) and the Recovery Act, both of which outline specific data points to be collected, TARP falls tragically short.

Treasury should disclose the identities of anyone who receives federal support, whether in the form of loans, direct stock purchases, guarantees, or anything else of value, placing bailout transparency in line with other federal spending transparency measures. Additionally, bailout recipients should report on how they used their federal support. With both the Recovery Act and FFATA, we have learned that while it is important to know who received government support, it is equally important to know what they did with that support. Currently, Treasury surveys TARP recipients to see how they are using their funds, but the results are infrequent, aggregated, and anonymous. Short summaries of how each financial institution used their federal bailout funding would greatly increase transparency and increase public trust in deeply unpopular institutions.

Lesson 3: Carefully consider conflict of interest guidelines.

TARP similarly delegates the creation of conflict of interest guidelines to the Treasury Secretary. Most TARP programs did not create significant conflict of interest problems, but one, the Public-Private Investment Program (PPIP), did. PPIP basically invested in mortgage-backed securities using a mixture of TARP and private funds and were managed by private management firms. Clearly, with private firms managing public money, conflict of interest problems abound, especially when, thanks to the interconnected nature of Wall Street, any PPIP investment could easily benefit the private firms managing the funds. Treasury, after a lengthy delay, eventually released conflict of interest guidelines for PPIP, including so-called "firewalls" blocking off the PPIP managers from the rest of their companies. However, TARP itself still does not have adequate conflict of interest guidelines. Adding such guidelines to bailout legislation itself would ensure that adequate federal regulations are written by the implementing agency and could accelerate the process of rulemaking by federal workers trying desperately to save a faltering economy.

These are certainly not the only lessons that Congress should take from its actions in 2008. Indeed, other lessons learned from the financial crisis were incorporated into the financial reform bill, passed earlier in 2010. And although that bill reforms the structure of Wall Street in an effort to prevent future bailouts, it is just as important to prepare for future crises now, when cooler heads may prevail. Many of the transparency elements discussed here were eventually instituted by Treasury, but the key is to have them standardized and in place before any future bailout. These provisions are what are necessary for a baseline of bailout transparency, but this list is by no means an exhaustive accounting.