The U.S. Treasury is receiving a bit of pressure from the internal watchdog that is overseeing the U.S. government's financial bailout. The special inspector, General Neil Barofsky, wants more information from the banks that received TARP funds, and he has his own bank survey to prove it can be done.

According to Barofsky's personal study, more than 80% of the banks responding to his survey said the TARP money they received was used for loans or to avoid reduced lending. Barofsky also said that fewer than a third of the 360 banks he surveyed said their lending levels would have been lower without the TARP funds.

My biggest issue with the TARP money was that there was no requirement for the banks to track the money, or to report what the money was used for -- despite assertions that the money was to be used to increase loans, one way or the other. There has to be some way to track this, and Barofsky has proven this. Of course, this is being dismissed by Assistant Treasury Secretary Herbert Allison (the top official in charge of the program for the Treasury) because, "it is not possible to say that investment of TARP dollars resulted in particular loans, investments or other activities by the recipient." The Treasury does conduct its own survey, which reported that outstanding loan balances were flat in May.

As citizens and taxpayers, we should know what the money is spent for -- but Barofsky did note that the banks did not quantify the amount of new lending or the difference in lending from the bailout funds. However, if (as Barofsky asserts) the banks budget how they would use TARP money, then why wouldn't we be able to know more? It is our right -- at least last time I checked.

Following a meeting with CEO Jamie Dimon on Feb. 6, Citigroup analyst Keith Horowitz believes that JPMorgan Chase & Co. (NYSE: JPM) could be among the first banks to repay its indebtedness under the government's Troubled Asset Relief Program (TARP).

"Clearly there is a risk of future government interference, which is why we believe management would like to get out," noted Horowitz. However, while Dimon thinks banking industry returns will be compressed during the intermediate term due to the government's involvement, he doesn't see any significant changes to JPMorgan's long-term outlook.

Options players, start placing your bailout bets: Nasdaq OMX Group (NASDAQ: NDAQ) announced today that it will launch options trading on its Government Relief Index (NASDAQ: QGRI) effective Monday. The 3-week old Government Relief Index was constructed to track the performance of companies that have received at least $1 billion in government funds under the Troubled Asset Relief Program (TARP) or similar bailout endeavors.

Since its launch on January 5, the QGRI has blazed a steady path lower, tumbling 36.8%. "When you have volatility and a direction, you start to see there's an opportunity to put a product on it that allows investors to benefit from the movement," said John Jacobs, Nasdaq's executive vice president, in comments to Reuters. (Is it just me, or is Mr. Jacobs subtly recommending put options on the Bailout Bunch?)

If you do decide to take a speculative gamble on the slipping Government Relief Index, you'll be wagering on such high-profile bailout names as Citigroup (NYSE: C), General Motors (NYSE: GM), Bank of New York Mellon (NYSE: BK), and Goldman Sachs Group (NYSE: GS). Overall, it looks like the QGRI might be traders' best opportunity to turn a profit on their steadily depreciating taxpayer investments. How's that for cold comfort?

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.