Bailout watchdog confirmed by Senate

[December 09, 2008]  WASHINGTON (AP) -- The $700 billion Wall Street rescue program will have a new watchdog.

The Senate on Monday confirmed Neil M. Barofsky, a New York prosecutor, as special inspector general within the Treasury Department. Barofsky will audit and investigate spending by the so-called Troubled Asset Relief Program that Congress and President George W. Bush set up two months ago to bail out the nation's financial sector.

Recognizing the enormous amount of taxpayer money at stake, Congress specifically called for three types of program oversight -- one by the Government Accountability Office, another by a special congressional panel and the third by the new inspector general.

Bush nominated Barofsky to the position last month. But his confirmation had been held up anonymously by one senator. The opposition was lifted last week.

The Senate approved his nomination by unanimous agreement.

The financial bailout program has come under criticism in Congress. A GAO audit last week found that the two-month-old program did not have safeguards in place to make sure financial institutions receiving taxpayer money were living up to their end of the bargain.

Barofsky is an assistant U.S. attorney and heads the mortgage fraud unit for the U.S. attorney's office in Manhattan.

As inspector general, he will have to file a report to Congress within 60 days detailing the "purchases, obligations, expenditures and revenues" associated with the bailout plan. Congress allocated $50 million to run the office.

Barofsky's confirmation comes as the Treasury Department announced Monday that it has $15 billion remaining to spend of the fund's first $350 billion. The Bush administration is considering seeking access to the second half of the money.

President-elect Barack Obama's transition team has encouraged Treasury Secretary Henry Paulson to develop a plan and seek a meeting with the bipartisan leadership of Congress. The Obama team has offered to be part of the discussions, but not to lead them.

Lawmakers have shown little appetite for spending the second $350 billion and have complained that Paulson has shifted strategies and damaged the public's and the market's confidence in the government. Many Democrats, led by Obama, have argued that more of the money should be devoted to reducing the number of mortgage foreclosures.

Senate Finance Committee Chairman Max Baucus, D-Mont., said Barofsky "will have to play catch-up and work ferociously" to account for the money already spent in the program. "I believe that he is up to the task," Baucus said in a statement.

Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee, also welcomed the confirmation, saying in a statement that "strong oversight of the program remains critical."

[Associated Press; By JIM KUHNHENN]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.