White House (CNSNews.com) – Days after the Treasury Department announced changes to the $700 billion bailout package for the country’s ailing financial industry, President Bush nominated a federal prosecutor to serve in an oversight role for the program.
Neil Braofsky, an assistant U.S. attorney from the Southern District of New York, has been named inspector general to oversee the Troubled Assets Relief Program (TARP), passed by Congress and signed by the president, in response to the credit crisis.
If confirmed to the post by the Senate, Barofsky will be responsible for auditing and investigating how the money is allocated and reporting on the value of assets purchased by the government. Currently, Treasury Department Inspector General Eric Thorson oversees the program.
The Bush administration “created a special inspector general for the TARP program to monitor the functioning of it,” White House Press Secretary Dana Perino announced Friday. “The president chose Neil Barofsky for this important position. He's a seasoned career federal prosecutor. He's known for his meticulous attention to detail, his sharp intellect, and we think he's an outstanding choice to fill this position.”
Before working in the mortgage fraud unit in New York, Barofsky was a lead prosecutor in the Southern District of New York’s securities fraud unit. He also prosecuted international narcotics traffickers.
On Wednesday, Treasury Secretary Henry Paulson announced that the bailout plan originally limited to buying bad assets from financial institutions would be broadened to support credit card debt, auto loans and student loans.
Paulson said this was a case of “changing a strategy or an approach if the facts change.”
However, the changes have prompted criticism.
“When you see so many changes, you wonder if they really know what they’re doing,” said Sen. Charles Grassley, ranking Republican on the Senate Finance Committee. “The administration and congressional leadership were so confident when they brought this to the members. Changing direction like this may be completely legal, but it certainly raises questions as to if they have a handle on how bad the situation really is.”
Grassley wrote a letter to Paulson and Federal Reserve Chairman Ben Bernanke, both architects of the plan, expressing those concerns.
Oversight is always a good thing, but a special inspector general wouldn’t be necessary if the Treasury Department had a better handle on the program, said Frank Gamrat, an economist with the Allegheny Institute for Public Policy, a free-market think tank.
“Why $700 billion in the first place? There didn’t seem to be a particular reason for that amount,” Gamrat, a critic of the bailout, told CNSNews.com. “This plan was rushed to approval. Nobody knew who would get what. Now Paulson has told us he reserves the right to change the plan.”