The jury is still out on Neil Barofsky, the recently confirmed Special Inspector General for the Troubled Asset Relief Program (SIGTARP), but it looks like he's off to a promising start.
Although his first official report to the congressional committees overseeing the bailout isn't due for another month, Barofsky wrote to Senate Finance Committee Chairman Max Baucus (D-MT) yesterday with a brief status update. His “unofficial” report suggests that he is already taking an expansive and aggressive approach to overseeing Treasury's use of its $700 billion in bailout funds.
Barofsky announced that his office has worked with Treasury officials to place strict conditions on General Motors, Chrysler, General Motors Acceptance Corporation, (GMAC), and Citigroup, all of which are recent recipients of TARP funds. For instance, the agreements with General Motors and Chrysler include language explicitly acknowledging SIGTARP's oversight role--an encouraging sign that Barofsky will be keeping a close eye on both Wall Street banks and Detroit automakers who receive TARP money. The contracts with the automakers, and with Citigroup in particular, also include requirements for establishing internal controls, disclosing more detailed information on the use of TARP funds, and limiting the use of TARP funds for executive compensation.
Barofsky declared that these agreements “represent a significant improvement over past TARP agreements and will better enable my Office and the other oversight bodies to fulfill their mission.”
He also announced that his office has been collaborating with other oversight agencies--including the GAO, the Congressional Oversight Panel, and the Financial Stability Oversight Board--and that he is in the process of forming a TARP Inspector General Council (TARP-IGC) comprising the Comptroller General and other IGs who might be overseeing the bailout. It's imperative that these groups continue to work together, as we've raised concerns in the past that Barofsky might have too much on his plate.
Given all the troubling issues surrounding TARP, and the questionable activities of certain banks that have received TARP funds, Barofsky will certainly have his work cut out for him in the weeks and months ahead. We hope that Congress will strengthen his authority by passing the much needed SIGTARP bill introduced by Sens. Claire McCaskill (D-MO) and Chuck Grassley (R-IA) last month.
-- Michael Smallberg