Recession Job Losses Top 4 Million is today's headline. The government has poured trillions of dollars into stabilizing the financial system, trying to stave off an economic calamity. Part of that is attempting to steady banks by giving them capital. It is essential that credit markets work again. The Troubled Assets Relief Program, a bumbling piece of legislation that Bush and Paulson left the nation saddled with, is a 700 billion dollar rescue package. 700 billion is a lot of money, a lot of taxpayer money, and the government has a right, and an obligation, to make sure it is spent prudently and wisely. The first part of $350 billion disappeared into a banking black hole.
Neil Barofsky, the man overseeing the $700 billion bailout, is armed with broad authority, including the right to carry a handgun and the power to subpoena. As special inspector general for the Troubled Asset Relief Program, he is charged with tracking the bailout funds. In the process, Mr. Barofsky is ruffling feathers on Wall Street and in Washington, demanding access and information some aren't eager to provide.
The mentality that got us inot this mess has not changed much.
Lawyers at institutions that have received government aid are trying to figure out how much leeway they have to push back against Mr. Barofsky, say people familiar with the matter. Some government officials say they are concerned about Mr. Barofsky's aggressive approach.
Instead of being open and forthcoming, institutions that have received TARP funds are using lawyers to finesse it, to hide, to conceal.
Mr. Barofsky ... is a former prosecutor who has tackled white-collar crime and international drug traffickers. He keeps a wooden knife from Colombia as a reminder of just how violent crime can become. Now he can roam the halls of Wall Street almost unfettered. His powers, granted by Congress last fall, give him the right to investigate and audit "the purchase, management and sale of assets under TARP."
His mission is clear, unequivocal: investigate and audit TARP funds.
He takes his mission seriously and views his mandate broadly. In an interview, Mr. Barofsky says his office has "the right to investigate and audit any TARP dollar, anywhere it goes" and to go after any type of TARP-related fraud.
It is good, for a change, that the government is the party with the hard-charging, focused, aggressive lawyer.
The position carries greater reach and independence than the other two "special" inspector generals overseeing the Iraq and Afghanistan reconstructions. Those officials answer to the secretaries of state and defense, while Mr. Barofsky answers directly to Congress.
Good charter. Intention seems quite clear.
Some within the government worry Mr. Barofsky's approach is scaring away participation in the government's rescue programs, rendering them less effective. Government officials say they saw a spike in banks withdrawing TARP applications after Mr. Barofsky said he would require documentation on how they are using the funds. Some of that spike could be due to congressional rumblings about stricter oversight.
Want the money? Answer questions, and be (o, that word) transparent.
Some hedge funds are leery about the Fed's lending facility because of the heightened scrutiny that would result, a condition included at the behest of Mr. Barofsky.
Lack of accountability and clarity are exactly the reasons why we are in this mess.
Mr. Barofsky says his purpose is to make sure taxpayer money is spent the way Congress intended, and to go after anyone, inside or outside government, who misuses the funds. "Members of Congress told me repeatedly that they want me to be the person who goes after the people who want to steal," he says.
Congress is moving to head off any challenges to his authority. Legislation passed by the Senate, soon to be considered by the House, would codify Mr. Barofsky's authority to peer into any firm benefiting from TARP dollars.
As if it were not already crystal clear.