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The Government Accountability Office has just released its second report [PDF] on the Treasury Department’s Troubled Asset Relief Program, and the troubling key takeaway is this: Treasury’s “strategic vision for TARP remains unclear.” Uh-oh. At present, TARP is the primary mechanism for ensuring the nation’s economy doesn’t entirely collapse. In other words, having more than an ad hoc plan for spending billions of taxpayer money needed to happen, like, yesterday.

With trademark understatedness, the GAO explains the problem:

[E]arly on Treasury outlined a strategy and approach to purchase whole loans and mortgage-backed securities from financial institutions, but changed direction to making capital investments in qualifying financial institutions as the global community opted to move in this direction. Moreover, once Treasury determined that capital infusions were preferable to purchasing whole mortgages and mortgage-backed securities, Treasury did not clearly articulate how the various programs (such CPP, SSFI, and TIP) would work collectively to help stabilize financial markets.

There’s more:

Other actions have raised additional questions about Treasury’s strategy. First, the funding of the first institution to receive funding under TIP [Targeted Investment Program] was announced weeks before the program was established. Similarly, the Asset Guarantee Program was established after Treasury announced that it would guarantee assets under such a program, and many of the details of the program have yet to be worked out. Second, Treasury’s efforts to mitigate residential foreclosures, which have contributed to increased volatility in financial markets, remain in the design phase with no clearly articulated strategy. Finally, while Treasury has continued to publicly report on individual issues, testify, and make speeches about the program, it continues to struggle to convey a clearly articulated and overarching message about its efforts, potentially hampering TARP’s effectiveness and underscoring ongoing questions about its communication strategy. Without a clearly articulated strategic vision, Treasury’s effectiveness in helping to stabilize markets may be hampered.

The GAO notes that Treasury has made some progress on the transparency front since it released its last report in early December, finding that the program was desperately in need of oversight. But the inescapable (and scary) conclusion here is that the agency is still flying by the seat of its pants. It literally can’t explain what its TARP strategy even is, let alone how it’s going to help get us out of this mess.

At least the GAO is looking over Treasury’s shoulder. And its auditors could soon be granted enhanced oversight authority. Earlier this week, Senators Max Baucus and Chuck Grassley, the chairman and ranking member of the Senate Finance Committee, respectively, introduced a bill that would give the GAO access to the records of bailout recipients when it conducts regular reviews of the TARP program.