Auditors question $700bn US bail-out plan

The US government must toughen the monitoring of its $700bn (£468bn) financial bail-out to ensure banking institutions limit their top executives' pay and comply with other restrictions, federal auditors said yesterday in the first comprehensive review of the US government's $US700bn rescue package.

In an discouraging report, the Government Accountability Office (GAO) criticised the Treasury Department for not having any mechanism to track how institutions were using $US150bn of taxpayer money injected into the banking system last month, Associated Press reports.

The 72-page report was strong enough to fuel congressional concern that banks and other institutions were not being properly monitored and failed to use the money to increase lending.

In a response to the GAO review, Neel Kashkari, head of the Treasury Department's Office of Financial Stability, said the agency was developing its own compliance program and was in disagreement with the need to work with regulators.