[Congressional Record (Bound Edition), Volume 154 (2008), Part 18]
[Senate]
[Pages 24487-24488]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      NOMINATION OF NEIL BAROFSKY

  Mr. BAUCUS. Mr. President, I am pleased to have supported the 
nomination of Neil M. Barofsky to be the Special Inspector General for 
the Troubled Asset Relief Program, or TARP, at the Treasury Department.
  I have a great interest in the Special IG for the TARP. I raised the 
idea in the first place, the first weekend that we were examining the 
Treasury financial bailout proposal.
  As many will remember, the Treasury's original proposal for the TARP 
was three pages long. It gave the Secretary of the Treasury unlimited 
power over $700 billion. And it provided no oversight by anyone.
  The House and Senate spent 2 weeks hammering out a better bill. That 
better bill included strong oversight, and it included the office of a 
Special IG for the financial rescue program, as I proposed that first 
weekend.
  The size and complexity of this effort is unprecedented in recent 
memory. It is essential to have a team that focuses exclusively on the 
TARP program as managed by the Treasury Department, and it is essential 
for that team to report to Congress on the status of this new program.
  My proposal for a Special IG was based on the Iraqi Reconstruction 
Special Inspector General. That was another massive oversight 
challenge. As the Congress debated what to include in the rescue 
package, 33 Senators signed a letter to the congressional leadership 
endorsing the idea of a Special IG to oversee the troubled asset 
program.
  During the negotiations, the Treasury Department resisted. But then 
the administration and Congress agreed that the Special IG should be 
part of the final legislation. Congress passed it, and the President 
signed it into law.
  The law gives the Special IG a $50 million budget. He will have the 
duties and responsibilities of inspectors general under the Inspector 
General Act of 1978. He will have the power to supervise and coordinate 
audits and investigations of TARP activities. He will have the power to 
appoint staff to carry out the activities of the office. And he may 
enter into contracts for audits and studies. We expect a report to the 
Finance Committee every 120 days on the activities of the TARP, and the 
law also directs the Special IG to report to Congress if information he 
requests is refused.
  I support the nomination of Mr. Neil Barofsky. I congratulate him for 
his willingness to serve his country. It is going to be a demanding 
job. For some time, he is going to be playing catchup. I believe Mr. 
Barofsky's experience as a prosecutor with the U.S. Attorney's Office 
in the Southern District of New York will serve him well in his new 
role as the Special IG.
  The financial rescue program is huge--$700 billion. The number and 
variety of financial institutions receiving money from Treasury is 
extensive. Tracking the path of the bailout dollars through these 
institutions is going to be a difficult task.
  The harsh reality is that almost half the $700 billion is already out 
the door of the TARP. The new Special IG will be looking back at 
Treasury's use of about $290 billion dollars in 45 days.
  Anyone who has seen a number of the congressional hearings this week, 
including our Senate Finance Committee on November 17, knows there are 
a lot of questions about how the TARP is operating.
  We know that the Treasury Department has named Neel Kashkari, 
Assistant Secretary for International Economics, to head the financial 
rescue program.
  Treasury has decided to send $125 billion to nine major banks, 
including Citigroup and JPMorgan Chase. Another $125 billion will be 
allocated for thousands of small and midsized banks. The American 
International Group, or AIG, will receive around $40 billion of TARP 
funds in return for issuing preferred shares to the Treasury 
Department.
  Secretary Paulson has also announced a policy regarding preferred 
shares and warrants for common stock. Standards for restrictions on 
executive compensation are being developed. Those include a clawback 
provision and a ban on golden parachutes during the period that 
Treasury holds equity issued through this program.
  Several senior posts have been filled. And the law firm Simpson 
Thacher & Bartlett has been selected as a legal adviser.
  Treasury has announced that the Bank of New York Mellon will serve as 
its custodian for the implementation of the Troubled Asset Relief 
Program, and PricewaterhouseCoopers and Ernst & Young have been hired 
to help with accounting and internal controls services.
  These decisions made by the Treasury Department are critically 
important to the financial rescue program. Yet the Treasury has made 
them all without any oversight by a Special IG.
  As for the use of the funds, the bottom line, frankly, is that the 
Secretary of Treasury told Congress and the American people that the 
Bush administration needed $700 billion to purchase troubled assets. 
Yet last month, the Treasury Secretary announced that, in fact, there 
were no plans to purchase troubled assets. To say that this was a 
surprise is an understatement. Congress needs to find out why

[[Page 24488]]

the first plan was rejected and a new plan was developed. What is the 
theory behind the new plan for providing equity to these financial 
establishments? What exactly are the agreements with the financial 
institutions who have received TARP funds? And what conflict of 
interest standards were followed? Once the Special IG is in place, we 
can start to answer some of these questions.
  Half the money is gone. And it is way past the time when we should 
have had a Special Inspector General on the job overseeing the program.
  I am pleased that the Senate has confirmed Mr. Barofsky, and I look 
forward to helping him conduct aggressive oversight of the TARP 
program.

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