WASHINGTON — Though the goals and specifics of the Treasury Department's bailout plan have evolved and shifted, a major part of its implementation has remained constant: personnel.
Since the bailout law was enacted Oct. 3, the Treasury has announced hirings and contracts as they were completed in mid-October and early November.
Despite a drastic shift in the bailout effort's goals — from purchasing troubled assets to orchestrating capital infusions for healthy banks — the people and companies hired to carry out the plans have remained the same.
Most striking is the continued engagement of Ennis Knupp + Associates, a Chicago investment advisory firm that signed a $2.5 million contract with the Treasury on Oct. 13 to be the investment consultant to the Troubled Asset Relief Program, or Tarp.
The firm was hired to help choose asset managers to administer a portfolio of troubled assets bought from banks. But after weeks of edging away from that program, Treasury Secretary Henry Paulson officially scrapped it Nov. 13. Yet Ennis Knupp is still on the Treasury's payroll, and a spokeswoman said she could not comment on how the company's duties have evolved.
Bank of New York Mellon Corp. was hired to handle bailout funds and manage the cash flow at Treasury. The banking company gets a monthly fee, but the Treasury has refused to disclose the amount. Bank of New York Mellon declined to comment. PricewaterhouseCoopers and Ernst & Young were hired as the program's accountants.
A spokeswoman from the Treasury did not respond to requests for comment.
The Treasury's contracting requirements dictate that any significant change in a firm's duties be documented through the submission of a new set of papers detailing the new arrangement. No new contract has been created for Ennis Knupp, nor has the original been amended.
Treasury has hired three law firms to help it with contracts covering the $250 billion being invested in financial companies under the Capital Purchase Program.
Simpson Thacher & Bartlett LLP, the first firm hired, helped the Treasury with its initial investment of $125 billion in nine big banking companies. Simpson Thacher also drafted standardized documents for different categories of banks — public and private — planning to participate in the capital program.
Simpson Thacher signed on for $300,000. The partner taking the lead, Lee Meyerson, has a background in bank merger deals.
The Treasury subsequently hired Hughes Hubbard & Reed LLP and Squire, Sanders & Dempsey LLP to represent it in the deals with individual banks participating in the capital program. Both firms signed a general contract — known as a blanket purchase order — for more than $5 million. The three firms would not comment for this story.
Observers said the Treasury is understaffed and overworked and needs the help it is getting from outsiders.
"There are questions, and it's extremely difficult to get answers from anyone at the Treasury," said Kip Weissman, a partner at Luse Gorman Pomerenk & Schick PC who represents banks weighing whether to seek capital from the government.
Mr. Weissman said interpretations of the documents the three law firms have created must still go through the Treasury itself.
"There's a big bottleneck," he said, "and I think there's frustration at the bank regulators and the law firms."
A Government Accountability Office report released Tuesday made a point of noting that the Treasury has yet to fully staff its Office of Financial Stability, which is implementing Tarp. The office will eventually need as many as 200 full-time employees, the GAO said, but as of Nov. 21 had only 48.
Among these are several officials borrowed from elsewhere, including Jonathan Feichter, a deputy director at the International Monetary Fund, who is the program's chief risk officer; James Lambright, the chairman and president of the Export-Import Bank, as the program's chief investment officer; and Howard Schweitzer, the Ex-Im Bank's vice president and general counsel, as its chief operating officer.
