The following is a breakdown of Inspector General Neil Barofsky's report before the House Committee on Financial Services, Subcommittee on Oversight and Investigations, ending June 30, 2009. Don't run away. You need to know this. Rep. Barney Frank (D-MA) is the chairman of the House Committee on Financial Services. Rep. Dennis Moore (D-KS) is the chairman of the Subcommittee on Oversight and Investigations. I do not see this report linked on the webpages. Perhaps it is there, but I have not found it. The following is the essence of the report, in my estimation. Below the "essence" is the full text. When you see text in between brackets [ ], those are my comments. I have used some short cuts in the "essence" but have not changed the meaning in anyway (you can check that for yourself as I have provided the page numbers. Note that I have interchanged SIGTARP (Special Inspector General TARP) with "we." Page 3 Transparency: ...repeatedly failed to adopt recommendations believed essential to providing basic transparency. Use of Funds Generally: Other than in a few agreements...Treasury has declined to adopt this recommendation, calling any such reporting "meaningless"... Valuation of the TARP Portfolio: Treasury has retained asset managers and is receiving such valuation data...but has not committed to providing such information except on the statutorily required annual basis [does that mean no valuations have been provided as TARP is not yet a year old?] Page 3 and 4 Regular disclosure of PPIF Activity, Holdings, and Valuation: ...the taxpayer will be providing a substantial portion of the funds that will be used to purchase toxic assets in the Public-Private Investment Funds (PPIF)...all trading activity, holdings, and valuations of assets...Not only should the disclosure be required as a matter of basic transparency in light of the billions of taxpayer dollars at state,...but the disclosure would serve well one of Treasury's stated reasons for the program in the first place: the promotion of "price discovery" in the illiquid market. Treasury has indicated that it will not require such disclosure. In the need to balance transparency...Treasury's default position should always be to require more disclosure rather than less...provide the American taxpayers as much information about what is being done with their money as possible. Unfortunately, in rejecting basic transparency recommendations, TARP has become a program in which taxpayers (1) are not being told what most of the TARP recipients are doing with their money, (ii) have still not been told how much their substantial investments are worth, and (iii) will not be told the full details of how their money is being invested.... Imposition of Information Barriers, or "Walls," in PPIP: we noted conflicts of interest and collusion vulnerabilities were inherent in the design of PPIP...PPIF managers will have significant power to set prices in a largely illiquid market...PPIF managers having an incentive to overpay significantly for assets or otherwise using the valuable, proprietary PPIF trading information to benefit not the PPIF, but rather the manager's non-PPIF business interests. We made recommendation to impose strict conflicts of interest rules....Treasury adopted many of the recommendations...HOWEVER, Treasury has declined to adopt on of our most fundamental recommendations - the requirement for imposition of an informational barrier or "wall" between the PPIF fund managers making investment decisions on behalf of the PPIF and those employees of the fund management company who manage non-PPIF funds. Treasury has deceided not to impose such a wall...despite that it has been done in other Government bailout-related programs...the risk is the reputational risk that Treasury could face if a PPIF manager should generate massive profits in its non-PPIF funds as a result of an unfair advantage...leaving Treasury vulnerable to an accusation that has already been leveled against it...that Treasury is using TARP to pick winners and losers...benefiting a chosen few at the expense of the dozens of firms that were rejected, of the market as a whole, and of the American taxpayer...putting in jeopardy the fragile trust the American people have in TARP and the government. Pages 5 - 8 Discussion that $643.1 billion of the $700 billion will be spent in 12 programs. To date, $643.1 billion has been committed, $441 billion has actually been spent. There is a chart on page 6 of Total Potential Funds Subject to SIGTARP Oversight as of June 30, 2009. On page 7 is a chart of Incremental Financial System Support, by Federal Agency.
Details the Special Inspector General's Investigations Division and the misdeeds of programs around the country who have taken client's monies while falsely identifying themselves as TARP. Through June 30, 2009, SIGTARP has 35 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected accounting fraud, securities fraud, insider trading, mortgage servicer misconduct, mortgage fraud, public corruption, false statements, and tax investigations. Two of SIGTARP’s investigations have recently become public: [see the list inside the document belowPage 9 Future Audits - Assessment of use of fund by TARP recipients, including the Making Home Affordable Mortgage Modification Program Page 9 and 10 [We're told how the IG's office is putting people to work in America - expecting that final number to be 160 new hires] [That's 160 people just to watchdog the hundreds already being paid to do so, including Joe Biden] SIGTARP did not know their own budgetary needs when the FY2010 budget was put together, and have asked for a budget of $23,300,000.00. THAT'S TWENTY THREE MILLION, THREE HUNDRED THOUSAND DOLLARS! [Don't get me wrong, the Inspector Generals are the good guys in this scenario and if they can make Treasury be transparent, and then put those in prison who deserve to be in prison, if and when fraudulent and criminal, then $23,300,000.00 is a bargain, I guess.]Page 10 Ends with making nice and saying that basically Treasury has cooperated with SIGTARP's information requests - AND while SIGTARP and Treasury have disagreed "vociferously,"...SIGTARP believes that Treasury has engaged actively in consulting with SIGTARP about it's concerns. [Problem is, as you can see above, Treasury has consulted and then rejected the consultations.] Follows Statement of Neil Barofsky, Special Inspector general Troubled Asset Relief Program: Barofsky Testimony