Bailout Fund Letters Thwarted
Saturday, January 31, 2009
The Obama administration is blocking the chief watchdog of the $700 billion federal bailout of the financial system from immediately sending banks requests about how they are using taxpayer funds, a senior Republican lawmaker said Friday.
The special inspector general for the bailout was told this week by the Office of Management and Budget, a White House agency, that it could not send out letters to all recipients of the bailout program right away because of a law known as the Paperwork Reduction Act. That decision could prevent the watchdog from receiving the information on the use of the bailout funds until as late as this summer, according to the special inspector general, Neil M. Barofsky.
"The Office of Management and Budget has sent a terrible signal by creating all sorts of red tape for the Special Inspector General to dig in to what's happening with TARP money, the taxpayers' money and, in fact, by even meddling in the Inspector General's work at all," Sen. Charles E. Grassley (R-Iowa), said in a statement, using the acronym for the formal name of the bailout -- the Troubled Assets Relief Program.
Barofsky sent a letter to the White House on Thursday asking for emergency processing for the letters to recipients of bailout funds, but the request was not granted. Kenneth Baer, a spokesman for the Office of Management and Budget, said the agency had instead on Friday authorized an expedited review, which means it will look into the matter in several days, instead of several weeks.
"We are trying to do everything we can to make this go through as quickly as possible," Baer said.
But aides to Grassley said the expedited review was no guarantee that the special inspector general would be allowed to send out the letters soon. Under normal procedures, it could take at least three months for the letters to be sent out, Barofsky wrote in the letter requesting emergency processing.
"Failure to obtain such processing will likely result in our inability to comply with a Congressional mandate, and could prevent us from efficiently detecting misuse of TARP funds," the letter said. Barofsky's office declined to comment.
Baer said emergency processing was not appropriate in this case. "It is usually only under the most extraordinary circumstances -- lives are at risk -- that you entirely waive these provisions and have no review at all," he said.