Sunday, July 26, 2009

Mr. Transparency Strikes Again

Last week, [Neil Barofsky, the chief watchdog over the $700 billion TARP bank bailout program] 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).


[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.


No matter one's views of the wisdom of the bailout and related programs, transparency, accountability and independent oversight are absolutely vital, and that is what Barosksy's office was created to ensure (though it's unlikely -- given how Washington works -- that Congress actually expected that the person in charge of that office would take those duties seriously and be willing to fight with senior administration officials to protect his independence).



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