I applauded the government for stepping in to address the banking system. I wasn't so sure that the plan concocted under TARP was the way to go, but I was willing to give it a chance. That honeymoon period is quickly ending.

The program primarily governs the future of Citigroup (NYSE:C) and Bank of America (NYSE:BAC). But it'll also have significant implications for other major TARP recipients, including Wells Fargo (NYSE:WFC), US Bancorp (NYSE:USB), and Goldman Sachs (NYSE:GS) -- not to mention the U.S. banking system at large.

The most recent release from the Congressional Oversight Panel (COP), a group set up to monitor the TARP, contained several notable insights -- none particularly comforting.

Lord of the TARP
Visitors to COP's website might notice the significant dissent in the five-person panel's ranks. COP issued a primary report supported by Chairwoman Elizabeth Warren, and presumably Congressman Jeb Hensarling and Damon Silvers. Then it sent out an alternate view put forth by Senator John Sununu and Richard Neiman. Finally, a solo Sununu penned a second alternate view.

Seriously, people?

Apparently, Sununu and Neiman were upset that the primary report spent significant time talking about potential alternative approaches to the subsidization program under TARP -- namely, liquidation and receivership. While they correctly point out that the COP should focus on the effectiveness of the TARP, rather than alternate plans, it seems silly to evaluate TARP in a vacuum. It's effective? As compared to what? Dropping napalm on banks' headquarters?

It would seem that we have either a partisan or an ideological dispute (or both) that's creating a rift at all levels. This has "political stalemate" written all over it.

The four commandments
But if the grievances within this panel make you want to throw your hands up in disgust, let me reel you back in for a moment. I do think we can draw something very valuable from the main report. 

Within that report, the panel -- or Chairwoman Warren, if you want to get cynical -- highlights four "critical elements" it identified in all successful resolutions of past banking crises:  transparency, assertiveness, accountability, and clarity.

I find these four elements particularly interesting, because there's nothing expressly financial about them. All four seem worthwhile elements for dealing with any crisis. And guess what? The Treasury seems way behind the eight ball on all of them.

When it comes to handling banks that need government aid to get by, it doesn't matter whether we're talking about massive JPMorgan (NYSE:JPM) or Capital One Financial (NYSE:COF) -- we need these four virtues. We need the government to throw its weight around a little when it's got billions of dollars on the line. We need somebody picking apart the actual contents of these banks' books. We need to be clear about how the process is being managed. And we need to hold people responsible where appropriate. (I'm not talking about political pandering.)

Currently, it seems we're simply handing out money, crossing our fingers, and hoping really hard that it all turns out well.

"Assertive" doesn't mean "blind"
The dissenters on the panel seem to imply that approach and effectiveness are unrelated. Leaving Las Vegas, I can drive to Detroit via New Orleans, and correctly say after each mile that I am now closer to my destination. Hence, my actions are technically effective. But that doesn't rule out the possibility that my approach is roundabout, inefficient, and, in this example at least, just plain silly. It seems to me that we should be judging TARP's effectiveness in the real world, not just the magical world of TARPland.

Furthermore, transparency, clarity, and accountability should apply to the government running the program as much as they do to the banks receiving aid. But if the Treasury keeps encouraging blind adherence to the TARP, and discouraging questions about how and how well it's actually working, we shouldn't expect to see much of those four virtues in action.

Further financial Foolishness: