House
Republicans are crying foul as the Treasury Department is apparently moving
forward with plans to exclude the Special Inspector General for TARP from
oversight of the administration's proposed $30 billion small business lending
program.
In
a statement released Monday afternoon, Rep.
Darrell Issa (R-Calif.), ranking member on the House Oversight
and Government Reform Committee, called Treasury's intentions
"disturbing."
"Denying
SIGTARP the ability to defend taxpayers sends a chilling message that IGs who
conduct real oversight will be punished for holding this Administration
accountable," Issa wrote.
Neil Barofsky, the special inspector general for TARP, has been a harsh critic of Treasury and the program, noting in his January report that
many of its goals "have simply not been met."
Issa's
outrage was in response to a letter that Barofsky sent Herbert Allison,
who oversees TARP for Treasury.
In the letter, released by Issa, Barofsky said that he was "surprised" to learn from Allison that Treasury is considering excluding SIGTARP from oversight of the Small Business Lending Fund, an apparent reversal from what Allison previously told him.
At issue is the fact that the lending fund is not technically part of TARP, yet is very similar to TARP's Capital Purchase Program in goal -- to increase lending -- and structure.
The Capital Purchase Program was the vehicle that the Treasury used to inject public money into banks and other financial services companies in return for preferred stock and other consideration.
The new lending program seeks to avoid some of the restrictions and disincentives that come
with participation in TARP.
"We believe that this small business initiative
needs strong oversight and will be working with Congress to ensure that
happens," Treasury spokeswoman Meg Reilly said. "Until Congress decides how to
structure the financing for small business lending, we aren't going to
pre-judge what that oversight will look like."
A spokesman for the Congressional Oversight Panel, another TARP watchdog group that was sent a copy of Barofsky's letter, said the panel is not currently weighing in on the dispute.
Barofsky, a former federal prosecutor, details his office's experience working as a watchdog and investigating malfeasance in TARP and, more specifically, the Capital Purchase Program. He wrote:
"Disregarding that expertise when developing a program that has the same goals, a very similar basic structure, that is being run by the same people, and that involves many of the same participants (and many of which might remain under SIGTARP's oversight in any event), would, at best, be terribly wasteful and lead to duplicative efforts and, at worst, could lead to significant exposure to waste, fraud and abuse as another oversight body gets up to speed (even assuming that another body could find the resources to do so)."
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