N.Y. Prosecutor Picked To Oversee Bailout

Barofsky Known for Fraud, Drug Cases

Neil M. Barofsky, who was nominated yesterday to be the chief watchdog of the $700 billion bailout program, has spent his career as a federal prosecutor going after everyone from perpetrators of esoteric multibillion-dollar accounting frauds to South American drug lords with names such as "El Gordo" and "Matador."

"He has stared down international drug traffickers," said Roberto Finzi, a close friend and former colleague, "so he ought to be able to stare down investment bankers."

The nomination comes amid growing concern over lack of oversight of the unprecedented bailout program, which is supposed to be scrutinized by two new independent bodies: a special inspector general and a congressional oversight panel.

Although the White House has formally nominated Barofsky, a turf war between two Senate committees vying to confirm him threatens to complicate the process. It is also uncertain when the five-member congressional panel can begin its work. Democratic congressional leaders yesterday named three members -- Richard H. Neiman, superintendent of banks in New York; Elizabeth Warren, a professor at Harvard Law School; and Damon Silvers, associate general counsel of the AFL-CIO -- but Republicans have not announced the remaining two positions they are allotted on the board.

Barofsky, 38, an assistant U.S. attorney for the Southern District of New York, is the head of that office's mortgage fraud unit and was the lead prosecutor in the $2.4 billion accounting fraud case against former executives of the collapsed financial firm Refco. He also was one of the lead attorneys in the prosecution of 50 Colombian guerrillas, making frequent trips to South America to get what has been described as the largest narcotics indictment ever returned.

Friends and former colleagues described Barofsky, a Miami native and die-hard Yankees fan who holds season tickets, as an extremely hard-working attorney who has shown an interest in finance since his days as an undergraduate at the Wharton School of the University of Pennsylvania.

"He is very sophisticated on financial crimes," said Elkan Abramowitz, a partner at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, a New York-based law firm where Barofsky was a white-collar criminal defense attorney. "He is very sharp, very smart, very hard working."

Barofsky, described by friends as a Democrat, gave $200 to Barack Obama's presidential campaign, according to people familiar with the matter. Through the U.S. Attorney's Office, he declined to comment.

The length and form of the confirmation process remains unclear. The Finance Committee, which has jurisdiction over the Treasury Department and a chairman who pushed for the creation of the special inspector general position, has scheduled a hearing for Monday afternoon to question Barofsky. But the Banking Committee, which has held multiple hearings on the bailout legislation, said last night that it will hold a similar one on Wednesday. In addition, the Homeland Security and Governmental Affairs Committee has the right to hold a hearing on inspectors general, or else 20 days must pass before the nomination proceeds to the full Senate.

The Senate parliamentarian plans to decide Monday which committee has jurisdiction. That throws into question whether the proper vetting and hearings can take place before the end of Congress' lame-duck session, scheduled to begin next week. "No one at this point has any clue how this is going to work," said one congressional aide, who spoke on condition of anonymity because he was not authorized to speak publicly.

In the meantime, Treasury's inspector general is working to fulfill the special inspector general's responsibilities. The Government Accountability Office, the investigative arm of Congress, is also examining the program, and Treasury officials are briefing lawmakers on the progress. Neel Kashkari, the top official overseeing the bailout, came under ferocious questioning yesterday by a House panel of Democratic and Republican lawmakers.

"Treasury has gone to great lengths to comply with the oversight provisions, as directed by Congress, and looks forward to working with permanent oversight officials when they are appointed," department spokeswoman Jennifer Zuccarelli said.

Barofsky is preparing to immerse himself in his new position, according to friends. He is planning to get married in January, but recently decided to cancel his honeymoon.