No More Doggies

Used to be, federal agencies' Inspectors General were expected to behave like junkyard dogs in their eagerness to tackle waste, fraud and abuse.  More often lately, they've been called watchdogs of the public trust and the taxpayer's funds.  But at a hearing of the Senate Finance Committee today, Chairman Max Baucus (D-MT) urged the nominee for the job of Special IG for the Treasury Department's bailout to “have the tenacity of a mongoose.”

Whichever animal he chooses to emulate, there was a clear consensus among committee members that Neil Barofsky, currently an Assistant U.S. Attorney in Manhattan, where he has pursued mortgage fraud, securities fraud, and Colombian terrorists, needs to be confirmed as quickly as possible.  Several Senators pointed out that nearly half of the $700 billion fund for the Troubled Assets Relief Program, or TARP, as the bailout plan is officially known, has already been distributed with very little transparency and almost no oversight.  Senator Olympia Snowe (R-ME) lamented that it had taken the administration 45 days to name its choice for this critical position.

Actually, the Senate Banking Committee has jurisdiction over the confirmation, and it won't hold a hearing until Wednesday.  And Homeland Security and Government Affairs has what's called a “sequential referral” of the nomination.  But it appears there is relative unanimity for the proposition that Barofsky is a good candidate; Baucus told him he hoped he'd be “on the job by the end of the week.”

At least two committees on the House side--Financial Services and Oversight & Government Reform--have indicated interest in oversight of the bailout program.  While each of these committees has legitimate concerns about the program, we grow concerned if the Special IG might have to spend too much of his time writing reports or testifying instead of digging into what's actually going on in his bailiwick.

POGO is also concerned whether the Special IG (actually referred to in the legislation as the SIGTARP) will have all the authorities he needs in order to perform his mission, given that the program for the relief of “troubled assets” has morphed already several times and has not yet actually been used for the purchase of said troubled assets.  Several Senators asked Barofsky about his authority and, although at one point he admitted that it's not clear what direction the program would take with a new administration, or even how long it will last, he believes he has what he needs.

Barofsky told Senator Chuck Grassley (R-IA) that if he felt he didn't have the necessary tools he would come back and ask for additional ones.  Grassley told him to just assume that he has the power that he thinks he needs, “and let somebody challenge you.”  Barofsky replied, “that's an excellent strategy, Senator.”

Pressed again by Senator Snowe, the nominee told her that his understanding of the situation is that while the scope of the program may have changed, “the core focus of the IG hasn't changed.”

Asked how long it will take him to staff up, Barofsky said he'd first concentrate on getting his key management staff in place; that means a deputy, an assistant in charge of audits, an assistant IG for investigations, and a counsel.  But he underscored that he'll be doing oversight from “day one.”  He also pointed out the importance of not only ensuring the absence of waste, fraud and abuse, but also of catching any mistakes in the program.  And he promised he would meet the first 60-day deadline for filing his first report.

POGO hopes that Congress will consider amending the legislation to allow the SIGTARP, like the Special IG for Iraq Reconstruction, to hire employees quickly without being constrained by civil service rules.  Since the office is meant to be of limited duration, and it's vitally important that it get up and running quickly, we believe such an exception to the usual rules is justified.

As Senator Ron Wyden (D-OR) said, oversight of the bailout program right now is “like Dodge City before the Marshals showed up.”

-- Beverley Lumpkin