Bailout watchdog: Who's the boss?

Treasury questions who supervises the inspector general who oversees $700 bailout. Justice Department will referee.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Jennifer Liberto, CNNMoney.com senior writer

Bailout tracker
Follow the money: Bailout tracker
The government is engaged in a far-reaching - and expensive - effort to rescue the economy. Here's how you can keep tabs on the bailouts. More
What investment strategy will you follow for the rest of the year?
  • Aggressively buying stocks
  • Slowly adding more stocks
  • Beefing up bonds and cash
  • Not changing a thing

WASHINGTON (CNNMoney.com) -- The watchdog charged with investigating fraud in the government bailout programs is feuding with the Treasury Department about who he answers to.

The question revolves around whether Treasury should play any role supervising Neil Barofsky, the special inspector general overseeing the $700 billion Troubled Asset Relief Program.

Since Barofsky took the job in December, he has launched at least 20 criminal investigations and six audits looking for wasted dollars.

There's no question the TARP law makes clear that Barofsky reports to the president, who has the power to appoint and dismiss him, and Congress, to whom he must give quarterly reports.

But does Barofsky also report to Treasury Secretary Tim Geithner? Treasury believes the law is unclear on that point and is seeking a legal opinion to clarify it, a department official said Monday.

Barofsky asserts that he would lose some of his investigative muscle if he has to report to Treasury.

That "could potentially have a serious impact on the independence of our agency and our ability to carry out our mandate," Barofsky said in a June 19 letter to Sen. Charles Grassley, R-Iowa, and Rep. Darrell Issa, R-Calif.

A Treasury official asserts that the question of who oversees the TARP inspector general was first raised last December by "career, nonpolitical" staff.

Barofsky sees the origin of the dispute differently.

In a letter to lawmakers, Barofsky said the question came up in early April when he sought to interview a Treasury attorney about the department's role in controversial bonus payments made to the unit of American International Group (AIG, Fortune 500) responsible for that company's downfall.

In the days before the AIG audit interview, Treasury and attorneys working with Barofsky swapped several emails over whether Geithner supervises the inspector general, according to a Barofsky memo.

Most federal inspectors general ultimately report to the heads of the department they inspect, according to the Inspector General Act of 1978.

Treasury notes that the provision that created the special IG post cites the 1978 inspector general law. Yet, it doesn't spell out that Treasury has a role overseeing the inspector general. And it doesn't use the word "independent."

Barofsky maintains that his office is different and reports to the president and to Congress -- period.

Treasury has asked the Justice Department's Office of Legal Counsel to weigh in. It wants an opinion on whether Barofsky also reports to the Treasury in addition to the president and Congress.

In his June 19 letter, Barofsky assured lawmakers that Treasury has not withheld any documents from his office and has made its staffers available for questioning.

But the tiff -- and the interest of some lawmakers in it -- underscores the continuing political sensitivity surrounding TARP. Many lawmakers, especially Republicans, have been critical of the $700 billion program, even introducing legislation to bring TARP to an early end.

Republicans have pounced on the squabble, which comes on the heels of a dustup over Obama's dismissal of an inspector general unrelated to the Treasury Department.

"At a time when the Treasury and Federal Reserve are exercising unprecedented powers intervening in our economy, the independence of the SIGTARP is one of the few checks and balances that remain," Rep. Issa said in a statement. To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Want to buy -- and live in -- a piece of history? It's not that far out of reach. These historic homes are not only for sale, they are incredible bargains. More
5 ways retailers are tracking you If you think pesky salespeople are invading your personal space, check out these 5 technologies that are tracking your movements throughout a store. More
Moto X vs. Droid Turbo: Which Droid should you buy? Motorola has made the two best Android smartphones this year. Here's how they stack up. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.