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Stop the Clock: Treasury Releases Bailout Contract

File it under the category of better late than never.

After five months, and much pestering, the Treasury Department finally released the entire contract it awarded the Bank of New York Mellon to keep the books for the $700 billion taxpayer-funded bailout plan.

Until now, Treasury had redacted compensation figures and other key terms from the three-year contract, which was awarded in October. 

As we previously noted, a January GAO report revealed that New York Mellon is estimated to receive $20 million to be the bailout’s chief custodian, far more than any other bailout contractor.

In October, Treasury officials said it would be only a matter of weeks before they removed the redactions. This estimate led us to launch the inaugural ProPublica Promise Clock—an effort to track just how many weeks it would take Treasury to release the figures.

Now, after 21 weeks, the clock has ticked its last tock. (Due to a rare slip in the clock’s vigilance, we are rewinding it to March 14, when Bailout Sleuth first noticed that the document was no longer blacked out.) A Treasury spokesman did not respond to an e-mail we sent asking when the redactions were removed and why it took so long to do so.

Treasury originally hired New York Mellon to run the government auctions used to purchase billions of dollars in distressed assets. But TARP’s course changed midstream, and now the bank is managing the government’s investments in the nation’s banks.

Though the GAO revealed that the bank would receive $20 million for this work, Treasury is not wedded to that amount. No total award figure is mentioned in the finalized Treasury agreement.

Instead, it disclosed that the bank received $3.8 million from Oct. 14 through Nov. 30 of last year. Since December, New York Mellon has been paid based on an elaborate formula that gives it a cut of Treasury's investments in the stock of banks, credit card companies and other institutions. In the cases of struggling institutions like AIG, Citigroup, Bank of America and the auto companies, New York Mellon receives a flat fee.

The bank must receive at least $2 million a year, but it stands to make more as the government ups its investments. Last year, the bank also took $3 billion in TARP funds itself.

Treasury originally released the contract, sans compensation figures, one day after Neel Kashkari, the Treasury official overseeing the bailout, touted the bailout plan’s transparency. "Consistent with Congress' intent, we are committed to transparency and oversight in all aspects of the program," he said.

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