Bloomberg News continues to show the way on Treasury Department coverage this morning with a hard-hitting piece that shows what a poor deal taxpayers got on their investments under the Troubled Asset Relief Program, or TARP.

Bloomberg reports that Hank Paulson’s Treasury negotiated equity stakes in banks—including Paulson alma mater Goldman Sachs—that are a fraction the size as that obtained by Warren Buffett for his $5 billion investment in Goldman in September.

This gives U.S. taxpayers, Bloomberg explains, a fraction of the upside that Buffett will get at Goldman, and that current top executives and other private stockholders will get at other bailed-out banks, if and when the banks recover. There is really no excuse for this. No one is asking Treasury to get tough with banks now (as Buffett did by obtaining a much higher interest on his preferred shares). This is about looking after taxpayers after a recovery, compensating them for risks they never asked to take in the first place.

I like how Bloomberg reporter Mark Pittman, whom we’ve praised elsewhere, twists the knife here (my emphasis):

Paulson’s warrant deals may give U.S. taxpayers, who are funding the bailouts, less profit from any recovery in financial stocks than shareholders such as Goldman Sachs Chief Executive Officer Lloyd Blankfein and Saudi Arabian Prince Alwaleed bin Talal, owner of 4 percent of Citigroup Inc., said Simon Johnson, former chief economist for the International Monetary Fund.

That hurts! In effect, this is a subsidized subsidy, Bloomberg reveals, and one that accrues to bank shareholders, who least deserve taxpayer help.

Throughout the crisis, Bloomberg has shown it understands the press’s most basic function: To hold the government to account. In doing so, it sets an example for other news organizations. It is notable that Bloomberg remains the only news organization to file suit under the Freedom of Information Act during an historic bailout marked by its secrecy. Contrast the Bloomberg story with a thin Journal piece Wednesday extolling Paulson’s skill as a money manager. The difference is night and day. It starts with a muckraking attitude, and Bloomberg clearly has it.

The Bloomberg piece comes the same day that other papers are reporting that an oversight panel headed by Elizabeth Warren plans to sharply criticize the Treasury for, among other things, failing even to track whether or not banks are fulfilling their basic obligation under the program: to lend.

We’re big fans of Warren here at The Audit and cite her all the time. We can’t believe she’s running the TARP oversight panel, a stroke of luck there.

The Warren report hits hard at the secrecy surrounding the program, particularly the fact that banks won’t say what they are doing with the money. As the Times reports:

“The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence,” the draft of the report said. “For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore,” it said.

The Washington Post weighs in with a scoop of great value that says the Obama administration is planning wholesale changes to the “embattled” TARP program that The Wall Street Journal just said was doing so well.

Geithner has been working night and day on the eighth floor of the transition team office in downtown Washington with Lawrence H. Summers and other senior economic advisers to hash out a new approach that would expand the program’s aid to municipalities, small businesses, homeowners and other consumers. With lawmakers stewing over how Bush administration officials spent the first $350 billion, Geithner has little chance of winning congressional approval for the second half without retooling the program, the sources added.

Good job, WP.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014).

Follow Dean on Twitter: @deanstarkman.