Making Government Transparent and Accountable
The Sunlight Foundation uses cutting-edge technology and ideas to make government transparent and accountable. Underlying all of our efforts is a fundamental belief that increased transparency will improve the public's confidence in government
The Sunlight Foundation Blog
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They Don’t Call It TARP For Nothing
You can’t see under it.
While we might be a bit concerned about Recovery.gov’s reporting practice for a bunch of ham, the problems with the TARP bailout program are so much worse. Witness the testimony that Neil Barofsky, Special Inspector General for TARP, plans to give on the overall lack of transparency in the program:
In particular, SIGTARP highlights four specific areas in which recommendations for making the financial industry bailout more accountable and open, have gone unheeded. Treasury has not committed itself to providing taxpayers with updated information on the financial performance of its TARP investments, according to Barofsky’s prepared statement. It has not acted on a recommendation that [Term Asset-Backed Securities Loan Facility] borrowers who fail to repay their loans be identified. It has not required the disclosure of “all trading activity, holdings, and valuations of assets of the PPIF” on a timely basis. And perhaps most significantly, Treasury has declined to require all TARP recipients to report on the actual use of TARP funds — notwithstanding a few agreements with Citigroup, Bank of America and AIG.
“Treasury has declined to adopt this recommendation, calling any such reporting “meaningless” in light of the inherent fungibility of money,” Barofsky will testify. “SIGTARP continues to believe that banks can provide meaningful information about what they are doing with TARP funds.”
“In rejecting SIGTARP’s basic transparency recommendations, TARP has become a program in which taxpayers (i) are not being told what most of the TARP recipients are doing with their money, (ii) have still not been told how much their substantial investments are worth, and (iii) will not be told the full details of how their money is being invested,” Barofksy adds. “In SIGTARP’s view, the very credibility of TARP (and thus in large measure its chance of success) depends on whether Treasury will commit, indeed as in word, to operate TARP with the highest degree of transparency possible.”
The TARP program has been in effect since last October and over two administrations and we have seen hardly any progress towards more transparency in the program. Pretty lame. Maybe they’ll actually listen to Barofsky’s suggestions for once.
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Congress Passes Stronger Authority for TARP Special IG
Yesterday, the House followed the Senate by passing a bill to provide the Special Inspector General for the Troubled Assets Relief Program (TARP) broader authority to investigate and more specific reporting requirements. In the disclosure and reporting department, the bill mandates quarterly reports to Congress from the office of the Special Inspector General and the posting of all reports on TARP recipients online within 24 hours after issuance. Good for Congress for passing this bill.
I should say how this bill came to my attention. Congressman Erik Paulsen, an original sponsor of the bill, wrote a pat-on-the-back blog post for The Hill today, but he never mentioned which bill the House had just approved. Luckily, the congressman is on Twitter so I just tweeted him and asked and he got right back with the bill number–S. 383, by the way. It really is that easy to talk to a congressman nowadays. (It’s also helpful if the answer you want is under 140 characters.)
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More Like This Please
The Washington Post has an excellent profile of Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (TARP). According to the Post, Barofsky is the genuine real deal when it comes to providing oversight and achieving accountability for the money spent on bailing out the banks. And he isn’t afraid to ruffle some feathers in maintaining integrity and independence:
Barofsky had a simple message: The government should require any bank receiving taxpayer dollars to explain how it is spending the money.
The official, Neel Kashkari, disagreed. So Barofsky, the special inspector general for the program, said his office would do it instead.
“I don’t think Treasury’s done enough,” he said. “Frankly, I’m not terribly concerned if anyone in Treasury actually thinks we’re being too aggressive. That’s our job.”
The episode illustrates why lawmakers and watchdog groups say Barofsky is emerging as the primary check on waste and fraud in the six-month-old financial rescue effort. But Wall Street executives and Treasury officials criticize him as an overreaching zealot scaring banks from joining the financial rescue, and even his supporters wonder whether his office has sufficient resources to adequately oversee such a gigantic program.
The Special Inspector General’s office has been allocated $50 million for what could be a decade’s worth of work. It is vital to have someone with Barofsky’s dedication to oversight and transparency in charge of this operation. The fact that he quotes from “The Simpsons” and his favorite band is The Clash just makes it that much better.
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Political Influence in Bailout to be Investigated
Numerous outlets have reported, and catalogued here, that political influence – campaign contributions, lobbying – has been part and parcel of the bank recovery (bailout) plan passed by the Congress and carried out by the Treasury Department. The Center for Responsive Politics reports that bailout recipients spent $114 million on political influence over the course of 2008. According to the Los Angeles Times, the special inspector general for the bank recovery Neil Barofsky is beginning an audit into political influence in the bailout.
Amid growing public consternation with the federal banking bailout, the Treasury Department’s special inspector general has opened an examination of political influence in handing out some of the $350 billion in federal bank bailout funds, The Times has learned.
The audit, which has just begun, is broad in scope but will focus on lobbying activities by financial institutions and what the special inspector general, Neil Barofsky, has called “outside influences.”…
Sen. Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, asked Barofsky earlier this week for an investigation into possible political meddling in the Troubled Asset Relief Program, or TARP. Grassley has been among the most vocal critics of how the program is working.
Barofsky apparently had already decided on such an investigation. He disclosed his plan deep in a 189-page document sent to Congress on Feb. 6, saying he had begun a “general audit reviewing outside influences on the [TARP] application process.”
The investigation hints at what could be a long, drawn-out legal drama. Barofsky, a former federal prosecutor, has his own multimillion-dollar budget and is aligning his office with other federal law enforcement agencies, pledging “robust criminal and civil enforcement against those, whether inside or outside of government, who waste, steal or abuse TARP funds.”
It is imperative that the final audit results released by the special inspector general’s office be made available online as required under the recently passed Improving Government Accountability Act. This act requires, among other provisions strenghtening inspector general offices, that all inspector general reports be made available online 1 day after their release.
The possibility that political influence has effected the bank bailout exists and could be a serious problem for the continuance of the program. Aside from the review that Barofsky is preparing, new disclosure rules need to be enacted for lobbyists engaging with government officials in all bodies and at all levels.
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TARP Progress on Transparency?
Here’s some potentially encouraging news. On Wednesday, Neil Barofsky, the Special Inspector General of TARP, disclosed that recently-approved agreements with the automakers and Citibank contain requirements for better disclosure. In a letter he sent Sen. Max Baucus, Chairman of Senate Finance Committee, Barofsky reported that the agreements give his office access to Citigroup’s records and requires that the company report how they are using the bailout funds.
As our friends at Taxpayers for Common Sense wrote, we all hope he gets the remaining 280 banks who also get bailout funds to start disclosing how they are spending the money.
Michael Smallberg at Project on Government Oversight adds that the new agreements also put limits on executive compensation. He calls on Congress to pass a bill that would beef up Barofsky’s oversight ability by giving his office more tools.
Lots of crossed fingers here.
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More On The Bailout Oversight Hold
TPM Muckraker has been all over the hold placed on the nomination of Neil Barofsky to lead the oversight of the bailout. All signs point to the initial suspect, Sen. Jim Bunning. If Bunning stays shut like a bad clam, the identity will have to come out in a few days anyways. In replying to my post from two days ago, Kagro X writes at Congress Matters:
I actually count three session days since Chairman Dodd’s November 21st statement noting the hold — pro forma sessions on the 24th, 26th and 29th. The calendar at Majority Leader Reid’s site lists a pro forma session for yesterday, December 2nd, with another scheduled for Friday, plus a working session on Monday. That’d take us to six session days since Dodd’s acknowledgment of the hold, which may or may not have been in place for a few days prior to the Dodd statement.
So in all likelihood, next week will see us pass the necessary sixth session day required under the new rule, and we’ll know who the chowderhead behind this delay is.
