Treasury to Watchdog: No Sniffing under the TARP

OPEN GOVERNMENT -- Glenn Greenwald, writing in Salon.com, reports on "the war being waged on the TARP watchdog's independence" by the Treasury Department—with White House backing.

Neil Barofsky, the chief watchdog over the $700 billion TARP bank bailout program, is one of those rare creatures in Washington:  he takes very seriously his responsibilities of independent oversight and accountability.  A career prosecutor, Barofsky is a life-long Democrat who donated money to Obama's presidential campaign.  But ever since he was appointed to head the oversight office created by Congress when it enacted TARP -- an office designed to ensure transparency and accountability at the Treasury Department and in the banking industry -- he has repeatedly clashed with Obama's Treasury officials over their lack of transparency in how the trillions of dollars in TARP-related funds are being sent to and used by the banking industry.  So seriously does Barofsky take his oversight duties that, as a Washington Post profile noted in March, "he refuses to eat with senior administration officials in the [Treasury] building's executive dining room to maintain his independence."

Barofksy's clashes with administration officials have intensified of late.  Last week, he issued a report documenting that the actual amount of taxpayer money theoretically put at risk in the bank bailout -- once Federal Reserve, FDIC and other programs are counted -- is $23.7 trillion, not the widely cited figure of $700 billion, a report that prompted attacks from the White House and Treasury on his credibility.  Separately, Barofsky has continuously disputed White House claims that it's impossible to account for what has been done by banks with the TARP funds.  Barofsky wants to compel banks to account for those funds and then publicize that information, while the administration opposes such efforts, claiming that accounting for TARP monies is impossible due to the "fungibility" of those funds.  To disprove that claim, Barofsky sent out voluntary surveys to the bank which proved that those funds could be tracked (and he found TARP funds were being used by receiving banks largely to acquire other institutions and/or create "capital cushions" rather than increase lending activity, the principal justification for TARP).

Most significant of all, and obviously due to Barofsky's truly independent oversight efforts, the Obama administration is now attempting to induce the Justice Department to issue a ruling that Barofsky's office is not independent at all -- but rather, is subject to, and under the supervision of, the authority of Treasury Secretary Tim Geithner.  By design, such a ruling would completely gut Barofsky's ability to compel transparency and exercise real oversight over how Treasury is administering TARP, since it would make him subordinate to one of the very officials whose actions Congress wanted him to oversee:  the Treasury Secretary's.

Comments

[kimocrossman]

I would like to read the actual report - is that available?