Lawmakers Rebuke Treasury Department Over TARP Spending
Tuesday, July 21, 2009; 10:28 PM
The Treasury Department took a bipartisan beating on Tuesday from lawmakers who claim the agency has failed to live up to its promises of transparency in handling the federal rescue of the financial system.
"The taxpayers now have a $700 billion spending program that's being run under the philosophy of 'don't ask, don't tell,' " Rep. Edolphus Towns, (D-N.Y.) said during a hearing on the Troubled Assets Relief Program, or TARP.
Rep. Darrell Issa (R-Calif.) went as far as to compare the Treasury's refusal to provide regular updates on how TARP money is being spent to the way convicted Ponzi scheme mastermind Bernard L. Madoff misled his clients.
"Congress will not be outlasted, and our patience is running out for the transparency promised by the administration," Issa said.
The antipathy during Tuesday's hearing of the House Committee on Oversight and Government Reform was provoked by a report issued earlier this week by Neil Barofsky, the special inspector general for TARP, in which he repeated calls for the Treasury to require regular, more detailed information from banks about their use of bailout funds.
A survey by Barofsky's office of 360 banks that had received federal aid to support increased lending showed that many institutions also used some of that money to buy other banks, make investments and repay existing debts.
"TARP has become a program in which taxpayers are not being told what most of the TARP recipients are doing with the money, have still not been told how much their substantial investments are worth, and will not be told the full details of how their money is being invested," Barofsky said.
Barofsky's report also caused waves with its claim that the potential U.S. commitments across all federal bailout programs could reach $23.7 trillion.
Treasury officials have balked at such a number, calling the aggregate number "inflated." They say that less than $2 trillion has been spent so far and that the report's estimate does not take into account various fees and collateral that help to offset the risk to taxpayers. Barofsky's estimate "does not provide a useful framework for evaluating the potential cost of these programs," Treasury spokesman Andrew Williams wrote in an e-mail.
During Tuesday's hearing, Barofsky responded to such criticism of the report's methodology. "It's very clear where these numbers came from," he said. "They came from the government itself. If the numbers were inflated, then it was the government itself that inflated them, not us."
Barofsky also said Tuesday that his office was conducting 35 ongoing criminal and civil investigations as of June 30, covering topics from accounting and securities fraud to insider trading. "Really, almost any kind of white collar crime you can think of," he said.