Barofsky was appointed by Bush in December 2008 - talk about a lameduck appointee! Here is what the Washington Post had to say about Barofsky at the time of his appointment.
Barofsky is not an expert on either the bailout or being an inspector general. Nonetheless, he seems to relish the opportunity to follow the dollars wherever they might lead. As an assistant U.S. attorney in Manhattan, he has eight years of experience investigating corporate fraud and narcotics trafficking, and he helped put two Refco executives in jail after the trading firm collapsed in 2005.So Barofksy who has no relevant experience or qualifications is put in place to oversee a $700 billion program. But he does have lots of enthusiasm and in eight years he was able to jail two executives in a fraud case. Maybe eight years from now he can claim to have jailed two more executives.
Well what kind of powers does this "special inspector general" have anyway?
The special IG is the sole executive branch officer with the power to oversee the potential conflicts of interest and miscalculations in the program. Armed with a $50 million budget and dual-reporting responsibility to Congress and the president, the special IG has the independence to audit and investigate every transaction and subpoena every record associated with the rapidly changing program.A $50 million budget sounds like a lot until you realize that this is much less than the $170 million that AIG is paying out in bonuses to the guys that created the derivatives mess over there. Heck, BankAmerica's CEO Pandit is spending $10 million just to redecorate his office. Maybe if Barofsky does a good job he can land a job at Goldman Sachs when he is done.
But the post does come with substantial powers which in the right hands could be used to go after the likes of Goldman Sachs which has abused the TARP bailout money to enrich itself. So why doesn't Obama appoint someone to the position with the experience to really go after the abusers? According to the Washington Post there is nothing preventing him from doing just that.
Under the Inspector General Act, IGs are presidential appointees who are subject to Senate confirmation but serve at the pleasure of the president. As a result, they are sometimes selected more for their political loyalty than their expertise. As the Project on Government Oversight argues, many inspectors general feel enormous political pressure to support the administration that appointed them.The Post clearly states that these are political appointees chosen for their loyalty to their parties, but inexplicably Obama has no plan to put someone in this position with the real motivation to go after people in the Bush administration who may have misused the TARP for their own personal interests. I'm thinking specifically of "Hank" Paulson here. This goes right along with the theme of appointing Tim Geithner as Treasury Secretary despite his strong ties to Goldman Sachs, Paulson and the bailout in general. Who's looking out for the American people?
The post does not appear to be on the Obama transitions replacement list.
The Wall Street Journal goes into more details on the powers of the TARP SIG.
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.So cool, he gets to carry a gun and can issue subpoenas - sounds like we have a new sheriff in town. But while New York Attorney General Andrew Cuomo has been busy issuing subpoenas to AIG in order to force them to reveal the details of their "retention" bonus payouts, it seems that Barofsky has been busy sitting on his hands.
But Barofsky hasn't spent all his time in useless paper shuffling. In recent testimony before Congress Barofsky states that he has sent out "surveys" to the TARP recipients requesting information on just how they have spent those funds. You can just imagine the response at the Wall St. banks - the panic as they nervously fill out the dreaded questionnaires. "Oh no! Not a survey! Please! Send me a subpoena, anything but that!"
Well Barofsky did make one headline this past week as reported by TPM Muckraker.
Neil Barofsky, the special inspector general for the bailout, told Congress this morning that he'll probe the AIG bonuses -- including what role the Treasury Department played.Certainly Barofsky knew when he made this statement that it would evoke memories of Watergate implying that there was some corruption in the Obama administration. Now I'm the last person that is going to defend Tim Geithner from attack, but isn't it suspicious that this question was asked by Republicans? And what about the role of the previous Treas-Sec, Henry Paulson? My guess is that Barofsky, who appears to be nothing but a partisan hack, is not going to go anywhere near any wrong doing by the Bush administration.
In words that may send a chill up Tim Geithner's spine with their invocation of Watergate, Barofsky, asked specifically by Republicans about the Treasury Secretary's role, said his probe would seek to find out "who knew what, when and why," in regard to the bonuses.
Obama made a serious political mistake by not dismissing Barofsky as soon as he took office. Now if he tries to take him out Republicans will scream that he is trying to protect Geithner.
At least Dennis Kucinich seems to be trying to keep Barofsky honest. Dennis brought Barofsky up before a subcommittee that he chairs and asked him about the influence of lobbyists over the TARP funds.
Neil Barofsky, the rescue package watchdog, said he will report his findings on "what impact, if any, that lobbyists or other outside influences have had" on the Treasury Department's spending of the money.I'm not particularly impressed by Barofsky's tough talk given his not so impressive record so far. Kucinich is right on the mark with his comment that government is "picking winners and losers". Lehman Brothers - loser. Goldman Sachs - winner. And GS doesn't hardly need to pay for lobbyists since Geithner put one of GS's lobbyist on the government payroll as his chief of staff. That would be Mark Patterson. And of course there is the GS lackey Kashkari who Paulson put in charge of the TARP program and is still running it.
Barofsky's message for recipients: "If you try and steal from this program, we will find you. We will investigate you. We will put you in jail."
Rep. Dennis Kucinich, D-Ohio, the panel's chairman, said after the hearing he's glad Barofsky is looking at the possibility of lobbyist influence over the spending.
"The problem with TARP from the beginning is that it puts the government in the position of picking winners and losers," Kucinich said. "Certainly, the possibility of outside influence, namely lobbyists, is always present. This is Washington, D.C., not Disneyland."
It's interesting that Eliot Spitzer, the disgraced ex-Governor of New York, has broken his public silence to speak up about the Goldman Sachs abuse of the TARP program. In articles in Slate here and here and in interviews here and here, Spitzer has repeatedly made the point that the brouhaha over the AIG bonuses is really a diversion and that the real emphasis should be on the money that the government paid to AIG but was diverted to GS. I could not agree more. Finally someone is shining a light on the abuses of Goldman Sachs. Maybe Obama should appoint Spitzer to replace Barofsky as the special inspector general for the TARP program. Spitzer already has a reputation as "the sheriff of Wall Street", and it looks like he's ready for a fight.
According to Spitzer, here are the questions that "should be answered, in public, under oath, to clear the air".
What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?
Was it already known who the counterparties were and what the exposure was for each of the counterparties?
What did Goldman, and all the other counterparties, know about AIG's financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn't they bear a percentage of the risk of failure of their own counterparty?
What is the deeper relationship between Goldman and AIG? Didn't they almost merge a few years ago but did not because Goldman couldn't get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG's business model was not to pay on insurance it had issued.
Why weren't the counterparties immediately and fully disclosed?
OK Mr. Special Inspector General Barofsky, what are you waiting for? Have you sent out the subpoena's to Bernanke, Geithner, Paulson, and Blankfein yet? ... How about now? ... Now?
By the way, SIGTARP has a hotline number which they have posted on their website.
"If you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the Troubled Asset Relief Program, please contact the SIGTARP Hotline!"I suggest calling and reporting "Hank" Paulson and Ben Shalom Bernanke for fraud, waste, abuse, mismanagement and misrepresentation affiliated with TARP. You can give them a link to my website if they want more details.