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