Archive for ‘Neil Barofsky’

July 27, 2009

‘The Legs of a Potential Scandal’

New York magazine’s Joe Hagan writes about the suspicions surrounding Goldman Sachs, insurance giant AIG, and last fall’s TARP bailout:

The AIG rescue is the incident from which all other Goldman conspiracy theories spring — the original sin, in a sense, of Goldman’s current public tarring. It’s the act that first made the average man on the street sit up and say, “Hey, wait a minute. The secretary of the Treasury [i.e. Henry Paulson], who used to be the Goldman CEO, just spent $85 billion to buy a failing insurance giant that happened to owe his former firm a lot of money. Does that smell right to you?” It also seems to have the legs of a potential scandal, with Neil Barofsky, the inspector general overseeing the Troubled Asset Relief Program, conducting an audit of the buyout.
Then again, if you’ve just posted $3.44 billion in second-quarter profits in an environment where, say, Morgan Stanley just reported a $1.26 billion loss, what does it matter what people say? . . .

Read the whole thing. These three facts — (a) Goldman has spectacularly profited, at a time of rising unemployment, foreclosures and bank failures, (b) Goldman was the primary beneficiary of the TARP bailout, and (c) Goldman’s former CEO was the driving force behind TARP — are hard to reconcile in any way that doesn’t raise the suspicion of corruption.

SIGTARP Barofsky’s investigations are clearly raising questions embarrassing to the people who backed the bailout.

BTW, a friend e-mails to say that Barofsky’s estimate of $23.7 trillion TARP liability is a number that “assumes The End of the World As We Know It, or Armageddon, in short.” The e-mailer adds:

The number is correct, but the vast majority of the dollars are called, precisely, “contingent liabilities.” They may, and they may NOT, become actual liabilities. [Bailout Nation author] Barry Ritholtz, who tends to be a lefty politically but a very hard-ass “numbers” guy pointed that out.
Yes, the bailout is unpopular and yes, it seems that Goldman Sachs has benefitted far beyond the laws of probability. Ritholtz agrees with that, too. And yes, CitiBank should be closed and sold for scrap.
But be careful with that $23T stuff.

The key part is, “The number is correct.” The likelihood that taxpayers will actually be required to fork over $23.7 trillion is remote, but it’s not a number that Barosky pulled out of a hat.

Oh, and speaking of scandal, Instpundit reminds us that today is the official publication date for Michelle Malkin’s Culture of Corruption: Obama And His Team of Tax Cheats, Crooks, and Cronies. It’s the Best. Book. Evah! Today at her blog, Michelle looks at Obama crony Valerie Jarrett. This afternoon, Michelle will be on Sean Hannity’s radio show and his Fox News TV show.

So buy two copies and give one to a liberal friend, just to annoy him.

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July 26, 2009

Geithner and the Scapegoat Sweepstakes

Thanks to Smitty for watchdogging the latest headlines about SIGTARP Neil Barofsky while I was on the road to Richmond yesterday. It’s important to see the big picture in this battle between Barofsky and Treasury Secretary Timothy Geithner:

The Wall Street bailout has been unpopular from its inception. . . . Now, we see unemployment soaring (more than 15% in Michigan, near 12% in California) and consumer confidence falling, while the stock market surges upward. You can’t blame people for suspecting that massive taxpayer-funded assistance to financial giants like AIG, Goldman Sachs and Bank of America might have something to do with this widening chasm between prosperity on Wall Street and misery on Main Street. . . .
Polls indicate a growing perception that the Obama administration is mismanaging the economy, with special favors for politically connected Wall Street fat cats at the expense of ordinary American taxpayers. . . .
With another approaching crisis in banking and forecasts that unemployment will continue rising for months to come, Obama will eventually start looking for a scapegoat. Though once hailed as an economic savior, the nominee who was “too big to fail,” Geithner is now odds-on favorite to win the Scapegoat Sweepstakes. SIGTARP Barofsky’s watchdogging of the bailout “black hole” may be enough to push Geithner across the finish line.

Read the whole thing, which includes a “document dump” with Barofsky’s quarterly IG report and other important documents on this important aspect of IG-Gate.

July 22, 2009

Rule 3 on IG-Gate (Plus, Notes forNewbies on Aggregation Method)

There’s a Memeorandum thread this morning linking the Hot Air IG-Gate Update, which got Instalanched. and is also linked by Frugal Cafe. Note that the Memeorandum thread also includes Joe Weber’s Washington Times interview with fired AmeriCorps IG Gerald Walpin:

“For a second I was thinking, ‘Why do I need all of this?’ I’ll just resign and go back to my good legal practice in New York,” Gerald Walpin told The Washington Times’ “America’s Morning News” radio show Tuesday.
“But I would then be part of the apparatus that is totally torpedoing the inspectors general,” Mr. Walpin said. “The watchdog would not really be a watchdog. He’d just be afraid of his shadow.” . . .

That’s new stuff, see? It was linked together with the IG-Gate Update in a post at Right Wing News. If several different blogs aggregate that stuff together, it creates sort of a center of gravity in the ‘sphere that is picked up by the Memeorandum algorithm.

And the Right Wing News post also includes today’s Washington Post story about Neil Barofsky — SIGTARP, special inspector general for the TARP bailout — who raised hell on Capitol Hill yesterday. As of 7 a.m., that story was not included in the Memeorandum thread, but given that Sen. Chuck Grassley has been defending Barofsky’s office against Treasury Secretary Timothy Geithner, (see Grassley’s June 17 letter to Geithner in PDF) it’s very much part of the same story.

Building up a Memeorandum thread, with everybody commenting on the same news stories and cross-linking, is what Rule 3 is about. Newbies should always hat-tip Memeorandum when they do this. Even if the increase in your traffic is not immediately significant, every time somebody links your blog, it boosts your Technorati ranking — you did remember to install Technorati, right? — and, eventually, you’ll be showing up on Memeorandum’s radar.

Think of it this way: When one dog in the neighborhood starts barking, they all start barking. That’s why Jimmie Bise dubbed us The Million Hit Squad.

If you need more background on the IG-Gate story, try the Mother of All Updates.

UPDATE: Yet more juicy SIGTARP goodness:

Barofsky testified that taxpayers aren’t being told what most TARP recipients are doing with their money or what their investments are worth and may never be told exactly how their taxpayer dollars are being used.
At a Government Oversight and Reform Committee hearing, one lawmaker compared Treasury to convicted Ponzi scheme artist Bernie Madoff, accused Treasury of trying to undermine Barofsky’s independence and threatened to haul Treasury Secretary Timothy Geithner before the panel if he didn’t adopt the IG’s recommendations.
“For us to get past this economic situation that we find ourselves in, the public has to believe that we’re doing the right thing,” said Rep. Elijah Cummings (D-Md.). “If we can’t show them that we are doing the right thing with their money, we’re going to have problems.” (Emphasis added.)

When Democrats start talking like that, you know it spells trouble for Geithner.

UPDATE II: Text of closing statement by Chairman Towns:

Earnings at the largest banks and the bank holding companies such as JP Morgan and Goldman Sachs are up, yet lending remains down. It is unacceptable that profits go up, while lending goes down. The taxpayers have invested very large amounts of money in these banks, but what have we gotten in return? It remains unclear.
The taxpayers deserve to know how their tax dollars are being spent.
The Treasury Department needs to publish full and detailed information on the use of TARP funds and publish the value of the TARP portfolio on a monthly basis. They have that information and they should make it public.
Moreover, Treasury also requires the largest banks to file monthly reports showing the dollar value of their new lending. That should be made public also.
If Treasury doesn’t put this information up on its website, this Committee will. And if Treasury doesn’t turn over this information voluntarily, Secretary Geithner will be brought before the Committee to explain.
What we have heard today convinces me that one of the best things Congress did when it created the TARP was to also create the Special Inspector General to oversee TARP spending. I can now understand why the Treasury Department would like to rein in the SIGTARP. But we are not going to let that happen.

Heh.

UPDATE III: Just got off the phone with a source on Capitol Hill who tells me yesterday’s Hot Air IG-Gate Update is a big hit with Republicans. Speaking of Republicans, here’s Rep. Darrell Issa:

The Special Inspector General of the Troubled Asset Relief Program (SIGTARP) Neil Barofsky testified today at a hearing of the House Committee on Oversight and Government Reform that the Treasury Department has “repeatedly failed” to implement SIGTARP recommendations that would reveal how Treasury is using taxpayer dollars. At the conclusion of the hearing, Ranking Member Darrell Issa (R-CA) asked Chairman Towns to bring Treasury Secretary Timothy Geithner before the Committee to address the questions raised by SIGTARP’s report. . . .
“We heard today that full transparency, which we called for, the President asked for and this Administration promised, is being blocked by the bureaucracy which often says ‘just trust and we will deliver,’” Issa said. “Until we have full transparency, we will never be able to know how much risk Treasury is assuming on behalf of the taxpayers. This Administration promised an ‘unprecedented’ level of accountability and transparency. They set their own standard. Now we’re going to hold them to it.”

Click here for Issa’s statement.
Click here for Neil Barofsky’s testimony.
Click here for a copy of the SIGTARP Report.

July 22, 2009

The Mother of All IG-Gate Updates

On the Internet, stuff gets scattered around so that you never see it all in one place. Today’s IG-Gate Update at the Hot Air Green Room pushes the story forward:

Behind closed doors on Capitol Hill last week, I asked a Republican source about the investigative efforts of Democratic staffers for the House Oversight Committee.
“Honestly?” the source said. “They’re useless.”
More than three weeks have passed since Oversight Committee Chairman Rep. Edolphus Towns (D-N.Y.) joined the committee’s ranking Republican, California Rep. Darrell Issa, to launch an investigation into the case of former Amtrak inspector general Fred Wiederhold Jr. . . .
Despite the “grave concerns” expressed by Towns and Issa three weeks ago, however, Republican sources on Capitol Hill have complained that Democratic staffers on the Oversight Committee have not shown much zeal for the investigation. Sources say Democratic staffers have skipped meetings and conference calls to which they were invited by GOP investigators, who are attempting to work with Grassley’s staff in order to prevent unnecessary duplication of efforts. Sharing documents and scheduling interviews with witnesses, allowing Republican and Democratic investigators from both chambers an opportunity to question these witnesses, is a demanding logistical task. And GOP staffers complain that this task seems to be lacking in terms of bipartisanship. . . .

Read the whole thing, because toward the end, I make this point:

This is a huge story, involving multiple investigations, and 1,200 words here don’t even begin to summarize the 1,400 words there [at The American Spectator on Monday], to say nothing of the 400 words I did last night about the SIGTARP report.

Like I said, read the whole thing, and follow the links, because this is one big sprawling mother of a story. The best I can do in any single chunk is to bring in new facts, new quotes, new angles, and link to as much other the other stuff as possible. (That Green Room article includes more than 25 links, including the link to the Spectator article, which has more than a dozen links.)

If you’ll go to Bob Belvedere’s WWU-AM and scroll down, he’s got a huge IG-Gate link dump with my reporting, Byron York’s reporting, columns by Michelle Malkin, reports from ABC News, the Washington Post, etc. There’s a lot of stuff out there, in other words, and you need to see it all if you want to try to understand this thing.

“Try,” I say, because I don’t even claim to understand it all yet. My sources talk about things and sometimes I can tell they’re trying to drop me a hint of something they want me to write about, e.g., “Who Is Eleanor Acheson?” It’s important to ask the right questions, as one of my sources said.

On the one hand, there is the temptation to focus on one aspect of the story — the Washington Times keeps calling this “WalpinGate,” which is too narrow — but on the other hand, you’ve got to be careful not to waste time playing “connect-the-dots” with things that might not really be connected. Yes, there’s a pattern, but that doesn’t mean there’s a conspiracy.

Still, as I predicted on June 18 — right after Michelle Malkin’s first column on the Walpin case slapped me upside the head — this story isn’t going away anytime soon. June 18 was the same day IG Fred Wiederhold delivered his report to the Amtrak board and suddenly retired, and also the same day Chuck Grassley made public his letter about the International Trade Commission IG, Judith Gwynne.

So barely a week after Walpin got his June 10 quit-or-be-fired ultimatum from White House lawyer Norm Eisen, there were two other IG cases. Then we have the case of the watchdog who’s still hanging tough, SIGTARP, Neil Barofsky. The bailout watchdog showed yesterday how much trouble he can cause, and it’s therefore no mystery why Treasury’s giving Barofsky a hard time. (My money’s still on Barofsky as the IG most likely to get a Cabinet secretary sent to federal prison.)

IG-Gate is a big mother, you see. Because I’m on deadline for a print magazine article, there’s no time for me to do a complete aggregation now, but here are the major IG-Gate articles I’ve done so far:

Each of those items is chock-full of links to other items. As you can see, just six weeks into this story, there’s a lot of stuff out there — and, no doubt, a lot more to come. Just keep hitting the tip jar.

One of these days, I plan to hit the American Spectator with the mother of all expense reimbursement requests — “$800 for fireworks?” “Promotional activity. Perfectly legitimate, Al.” — but in the meantime, Daddy needs a new pair of shoes.

UPDATE: Welcome, Instapundit readers! Just in case you’re wondering why Professor Reynolds loves this story so much, I once again remind you to read the whole thing. The professor’s drooling at the prospect of The Mother of All Chris Dodd Updates.

Meanwhile, be sure to check out the IG-Gate Rule 3 memo, which offers more tasty watchdog morsels.

July 20, 2009

SIGTARP Strikes: IG Barofsky Report SaysTreasury Not Tracking Bailout Cash

The watchdog bites Tim Geithner:

The top watchdog over the financial bailout package said the Treasury Department is rejecting “common sense” by not requiring banks receiving billions of dollars in government money to say how they are using the money.
In a report to be released on Monday, Neil Barofsky said banks that have received money from the $700 billion bailout package passed last year are able to indicate how they are using taxpayer money and that Treasury should require banks to be more transparent. . . .
Barofsky is the Special Inspector General over the Troubled Asset Relief Program (SIGTARP) that was passed by Congress in October. . . .

Read the whole thing. This SIGTARP report is a perfect example of why the Obama adminstration hates IGs. The Democrats just want to shovel money out the door and don’t care who gets it, except to be sure their well-connected friends get their share.

According to the liberal neo-Keynesian economic gospel, as long as the federal government does X-billion dollars of deficit spending, that will produce X-plus-Y amount of stimulus value (where Y = Magic Government Spending Multiplier Effect) without regard to whether the money ends up feeding orphans or supplying the mistresses of Goldman Sachs executives with bustiers and garter belts

Unfortunately for liberals, the stupid taxpayers can never seem to comprehend the nuances of neo-Keynesian theory the way Nobel Prize-winning genius Paul Krugman does.

No matter how many times they’re lectured about this “stimulus”/bailout brilliance, the idiots who pay the taxes get a little miffed to discover that their great-grandchildren’s future has been hocked to pay for new wallpaper and wainscoting in the executive lavatory of a giant banking conglomerate which — as every expert in Washington explained last fall — was so frantically in need of cash that the branch managers were sending tellers to sell plasma to the blood bank, merely to prevent a complete catastrophic meltdown in the global finance system.

Those stupid taxpayers are like that. They have a habit of remembering irrelevant minor details like those 90-point headlines on the front pages of all the newspapers:

CRISIS LOOMS: WORLD ECONOMY TEETERS ON BRINK OF FINAL APOCALYPSE; CONGRESS DESPERATELY FIGHTS TO AVERT ECONOMIC DOOMSDAY; PLAGUES OF LOCUSTS, FROGS FEARED

Damned idiot taxpayers. What do they know about economics and budgets and stuff that only people with Ivy League Ph.Ds can ever hope to understand?

(H/T: Memeorandum.)

July 8, 2009

IG-Gate Update

Fox News obtains notes from a meeting that led to the firing of AmeriCorps Inspector General Gerald Walpin:

The informal meeting notes, taken by CNCS Counsel Frank Trinity, said that board members were indeed concerned about Walpin’s “behavior.” . . .
But the account also shows that Chairman Alan Solomont stated concern about Walpin’s accusations against the board and not his mental health as the apparent cause for the dispute that led to Walpin’s termination. . . .
A congressional investigator who participated in a three-hour meeting with Trinity on Monday told FOXNews.com that it was clear the board sought Walpin’s ouster because of hurt feelings and professional friction, even though inspectors general are supposed to be free to challenge staff at their respective agencies. The investigator, who requested anonymity, argued the White House did not thoroughly review the matter.
“It was the disagreements between the IG and the senior management at the agency that provoked the board to remove Walpin,” the investigator said. “The senior people at the agency chafed under Walpin’s oversight. … They communicated this to the board, which rubber-stamped senior management. [The board] took it to the White House, which rubber-stamped the board.”

Hmmm. Is Fox’s source also my source? Then why . . . Never mind. As long as it advances the story, I’m not particularly concerned with who gets what. Meanwhile, Democrats in Congress are working to muzzle federal watchdogs in the financial sector:

Inspectors general at five financial regulatory agencies are objecting to legislation that would elevate their positions to the presidential-appointment level, arguing that the move would compromise their ability to conduct independent investigations.
The bill would elevate the five officials at the Federal Reserve Board of Governors, the Commodity Futures Trading Commission, the National Credit Union Administration, the Securities and Exchange Commission, and the Pension Benefit Guaranty Corp.

Lots of graft opportunities in those agencies, y’see. Don’t need independent watchdogs snooping around while the Chicago Way is put into operation on Wall Street. And here’s some news on the “SIGTARP” story I overlooked last week:

Congress did not legislate transparency for its own members’ manipulation of the bailout fund, known as the Troubled Assets Relief Program, or TARP. . . .
[T]he Treasury Department steered $135 million in TARP money to a bank in Hawaii after Sen. Daniel K. Inouye’s staff contacted bank regulators on its behalf. Mr. Inouye, a Democrat, is Hawaii’s senior senator. Nothing unusual so far: Members of Congress have been lobbying for home-state banks almost since TARP started — so much so that congressional influence is the subject of a TARP inspector general report due out this summer. In one prominent case, Rep. Maxine Waters (D-Calif.) arranged a meeting between regulators and OneUnited of Massachusetts, a bank in which her husband held shares. Rep. Barney Frank (D-Mass.) later wrote language into the bailout bill that effectively directed the Treasury to give special consideration to OneUnited, and he followed up with a call to Treasury. The bank got $12 million. (Emphasis added.)

That forthcoming report from “SIGTARP” — special inspector general Neil Barofsky — should be lots of fun.