Neil Barofsky, Special Inspector General for TARP since the program’s inception in 2008, will leave the job at the end of March.
In his resignation letter to President Obama, Barofsky hailed his office’s ability to provide a level of transparency to the $700 billion bailout program while helping gain the convictions of 14 individuals for criminal fraud, avoiding $550 million in potential fraud losses, and recovering an additional $150 million in other fraud monies.
Such activity would, he noted, ensure “that SIGTARP will more than pay for itself for its entire existence.”
Barofsky’s actions and demeanor were not without their detractors, however, and his departure was viewed with approval in at least some quarters. He was especially critical of the Treasury Department and the Federal Reserve Bank of New York in relation to the enormous bailout of the American International Group Inc., possibly TARP’s biggest black eye.
Timothy F. Geithner was the head of the New York Fed at the time, and was soon afterward named Secretary of the Treasury.
An employee of the Treasury, speaking to the Washington Post on the condition of anonymity, claimed that Treasury was not afraid of critics, but asserted that Barofsky had “been consistently wrong about a lot of big things.”
The story said that some at Treasury and in the financial services industry viewed Barofsky, a former federal prosecutor, as a self-promoter who tended to overreach his boundaries. According to another Treasury employee, the resignation “was like a nice valentine to us.”
Barofsky himself perhaps found the ideals and realities of his job to be rather disparate. In March 2009 he set out to dissect the $165 million in bonuses paid out by AIG even after its bailout by taxpayers. His failure to claw back any of the funds or to mete out restorative justice in the eyes of the taxpayers was a shortcoming he shared with Kenneth Feinberg, TARP’s compensation czar.
One area where Barofsky and the COP report were in total accord, however, was their criticism of the “too-big-to-fail” philosophy adopted by the Treasury in relation to companies such as Bank of America Corp., General Motors Co., and AIG, among others.
In his Quarterly Report to Congress in January, Barofsky noted that the problem had not been solved and that such safety nets were deleterious to any economic recovery. “The SIGTARP believes,” he said at the time, “we are running the risks of repeating the same mistakes that resulted in the American people footing the bill for the largest bailout in American history.”
As reported by Bailoutsleuth earlier this week, members of the Congressional Oversight Panel voiced the identical concern. Two COP members repeated the warning of the too big to fail strategy, fearing that companies “can reap the benefits but will not suffer the consequences if the gambles are unsuccessful.”