The Los Angeles Times reported yesterday on a previously undisclosed tug-of-war involving Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and officials at the Treasury Department.
In a letter sent yesterday to Treasury Secretary Tim Geithner, Senator Charles Grassley (R-IA) said that his office was tipped off to a dispute over certain documents that Treasury was withholding from the SIGTARP under a claim of attorney-client privilege. Attached to the letter is an April memo from Barofsky to the acting general counsel at Treasury in which Barofsky appears to be responding to three questions: 1) Is SIGTARP an independent entity within Treasury?; 2) Is SIGTARP subject to supervision by the Treasury Secretary?; and 3) Is the attorney-client privilege a valid reason for Treasury to withhold documents from SIGTARP?
There are two important bills to consider here: Section 121 of the Emergency Economic Stabilization Act, which created the SIGTARP, and the SIGTARP Act of 2009, which clarified and expanded his authority. Drawing on this legislation, Barofsky concludes that 1) the SIGTARP is indeed an independent entity within Treasury; 2) it was Congress's intent to "preserve SIGTARP's independence and not subject [it] to the Secretary's ability to shut down an audit or investigation"; and 3) the attorney-client privilege "does not relieve Treasury from its responsibility...to cooperate with SIGTARP and produce records and information deemed necessary to the accomplishment of the SIGTARP's mission."
According to the Times, Barofsky eventually received the documents in question. Nonetheless, if Treasury was in any way attempting to infringe upon the SIGTARP's independence, there is still cause for concern. In yesterday's letter, Sen. Grassley asked Secretary Geithner to provide the original memo that Barofsky was responding to, and to clarify whether Treasury sought an outside legal opinion on the matter, as the memo seems to suggest.
We appreciate Sen. Grassley's ongoing support for the SIGTARP: in addition to co-sponsoring the SIGTARP Act of 2009, he was instrumental in convincing OMB to remove an administrative hurdle that was preventing Barofsky from doing his job. It's also interesting to note that at a hearing on April 23 before the Joint Economic Committee, Barofsky made no mention of this incident or of any other attempts by Treasury to challenge his authority.
Barofsky has an enormously important job trying to account for the federal funds set aside for the bailout programs--one recent report puts the grand total at over $13 trillion--so it's imperative that he be able to carry out his duties without any political interference. We'll keep you posted as we find out more about this latest incident.
-- Michael Smallberg
UPDATE: As reported by ABC News and The Washington Post, Treasury has confirmed that it asked the Justice Department's Office of Legal Counsel to "clarify the SIGTARP's complex legal status within the executive branch." Click here to see the full unredacted memo sent from Barofsky to Treasury on April 7.