The Federal Deposit Insurance Corp. has ordered more than 5,000 state-chartered banks and saving and loans associations that accepted help from the first $350 billion of the Troubled Asset Relief Program in 2008 to monitor and report on how they spent the funds. The banks were ordered to include descriptions of how the federal funds helped them help borrowers avoid foreclosure.

Among the large banking institutions that received money from TARP are Citigroup, JPMorgan Chase, Bank of America and Wells Fargo. The smaller banks include Regions Financial, Zions Bancorp and Western Alliance Bancorp. These banks received a total of $250 billion from the Treasury Department in 2008 to prop up their capital.

The directive also applies to financial institutions that received help from the Federal Reserve in the form of temporary loans and from the FDIC in the form of three-year government guarantees.

According to Wayne Abernathy, a top executive of the American Bankers Association, the FDIC directive will give them the opportunity to show how the federal funds enabled association members to continue providing affordable loans to consumers and help mortgage borrowers avoid foreclosure.

The Treasury Department has been criticized by the public and by Congress for how it handled the first half of the TARP funds. They cited the department’s lack of focus and failure to directly help borrowers avoid foreclosure. The department also did not establish conditions that would force the financial institutions to focus on helping revive the housing market and helping end the financial crisis.

To make a bigger impact on the housing and credit sector and on foreclosure-laden communities, the economic advisers of President-elect Barack Obama have been developing a set of provisions that would make recipients more accountable for what they receive from the second $350 billion of the $700 billion TARP fund. Among others, the provisions would limit executive compensation and would ensure the allocation of money for borrowers at risk of foreclosure.