Numerous outlets have reported, and catalogued here, that political influence – campaign contributions, lobbying – has been part and parcel of the bank recovery (bailout) plan passed by the Congress and carried out by the Treasury Department. The Center for Responsive Politics reports that bailout recipients spent $114 million on political influence over the course of 2008. According to the Los Angeles Times, the special inspector general for the bank recovery Neil Barofsky is beginning an audit into political influence in the bailout.
Amid growing public consternation with the federal banking bailout, the Treasury Department’s special inspector general has opened an examination of political influence in handing out some of the $350 billion in federal bank bailout funds, The Times has learned.
The audit, which has just begun, is broad in scope but will focus on lobbying activities by financial institutions and what the special inspector general, Neil Barofsky, has called “outside influences.”…
Sen. Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, asked Barofsky earlier this week for an investigation into possible political meddling in the Troubled Asset Relief Program, or TARP. Grassley has been among the most vocal critics of how the program is working.
Barofsky apparently had already decided on such an investigation. He disclosed his plan deep in a 189-page document sent to Congress on Feb. 6, saying he had begun a “general audit reviewing outside influences on the [TARP] application process.”
The investigation hints at what could be a long, drawn-out legal drama. Barofsky, a former federal prosecutor, has his own multimillion-dollar budget and is aligning his office with other federal law enforcement agencies, pledging “robust criminal and civil enforcement against those, whether inside or outside of government, who waste, steal or abuse TARP funds.”
It is imperative that the final audit results released by the special inspector general’s office be made available online as required under the recently passed Improving Government Accountability Act. This act requires, among other provisions strenghtening inspector general offices, that all inspector general reports be made available online 1 day after their release.
The possibility that political influence has effected the bank bailout exists and could be a serious problem for the continuance of the program. Aside from the review that Barofsky is preparing, new disclosure rules need to be enacted for lobbyists engaging with government officials in all bodies and at all levels.