Saturday, July 25, 2009

The War Being Waged on the TARP Watchdog's Independence & When Did Profit Motive Become King?

Two items interest me today and they are doozies!

Glenn Greenwald expels the mystery of the TARP's non-watchdog independence and the sacrifice of Neil Barofsky to the gods of ire (emphasis marks added - Ed.):

Neil Barofsky, the chief watchdog over the $700 billion TARP bank bailout program, is one of those rare creatures in Washington: he takes very seriously his responsibilities of independent oversight and accountability.

A career prosecutor, Barofsky is a life-long Democrat who donated money to Obama's presidential campaign. But ever since he was appointed to head the oversight office created by Congress when it enacted TARP - an office designed to ensure transparency and accountability at the Treasury Department and in the banking industry - he has repeatedly clashed with Obama's Treasury officials over their lack of transparency in how the trillions of dollars in TARP-related funds are being sent to and used by the banking industry. So seriously does Barofsky take his oversight duties that, as a Washington Post profile noted in March, "he refuses to eat with senior administration officials in the [Treasury] building's executive dining room to maintain his independence."

Barofksy's clashes with administration officials have intensified of late. Last week, he issued a report documenting that the actual amount of taxpayer money theoretically put at risk in the bank bailout - once Federal Reserve, FDIC and other programs are counted - is $23.7 trillion, not the widely cited figure of $700 billion, a report that prompted attacks from the White House and Treasury on his credibility. Separately, Barofsky has continuously disputed White House claims that it's impossible to account for what has been done by banks with the TARP funds. Barofsky wants to compel banks to account for those funds and then publicize that information, while the administration opposes such efforts, claiming that accounting for TARP monies is impossible due to the "fungibility" of those funds. To disprove that claim, Barofsky sent out voluntary surveys to the bank which proved that those funds could be tracked (and he found TARP funds were being used by receiving banks largely to acquire other institutions and/or create "capital cushions" rather than increase lending activity, the principal justification for TARP).

Most significant of all, and obviously due to Barofsky's truly independent oversight efforts, the Obama administration is now attempting to induce the Justice Department to issue a ruling that Barofsky's office is not independent at all - but rather, is subject to, and under the supervision of, the authority of Treasury Secretary Tim Geithner. By design, such a ruling would completely gut Barofsky's ability to compel transparency and exercise real oversight over how Treasury is administering TARP, since it would make him subordinate to one of the very officials whose actions Congress wanted him to oversee: the Treasury Secretary's.

Barofsky has, quite rightly, protested the administration's efforts to destroy his independence, and has done so with increasing assertiveness as the administration's war on his oversight activities has increased. Why would an administration vowing a New Era of Transparency wage war on a watchdog whose only mission is to ensure transparency and accountability in these massive financial programs?

It should take little effort to explain the significance of these clashes. The amount of taxpayer money transferred to the banking industry or otherwise put at risk for its benefit is astronomical. Professor Nouriel Roubini argues in a New York Times Op-Ed today that actions by the Federal Reserve over the last nine months helped avert a Depression, while former Governor Eliot Spitzer said this week that the Fed has turned into a "Ponzi scheme" that relies on insider dealing and requires vastly increased scrutiny. Those claims aren't mutually exclusive. It's not surprising that transferring extraordinary sums of taxpayer money to a particular industry will help that industry avoid collapse, but it is still the case that the potential for extreme corruption and even theft in such transactions is enormous (indeed, even Roubini argues that Fed Chairman Ben Bernake played an important role in enabling the crisis in the first place). . .

Bill Maher asks "When did the profit motive become the only reason to do anything? When did that become the new patriotism? Ask not what you could do for your country, ask what's in it for Blue Cross/Blue Shield."
If conservatives get to call universal health care "socialized medicine," I get to call private health care "soulless vampires making money off human pain." The problem with President Obama's health care plan isn't socialism, it's capitalism.And if medicine is for profit, and war, and the news, and the penal system, my question is: what's wrong with firemen? Why don't they charge? They must be commies. Oh my God! That explains the red trucks!

Suzan _________________


Beach Bum said...

When did profit become king? It always was but like someone said capitalism without humanity is evil and we are having to deal with some serious demons these days. Well dressed and all smiles while the business network bimbos blush with excitement but evil none the less.

Suzan said...

You've got a nice turn of phrase my friend. And meaning.

Thanks for your thoughts!


network bimbos blush with excitement