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U.S. Bailout Watchdog Barofsky to Resign March 30

U.S. Bailout Watchdog Barofsky to Resign March 30
Neil Barofsky, special inspector general for the Troubled Asset Relief Program (TARP), at a hearing of the House Oversight and Government Reform Committee in Washington. Photographer: Brendan Hoffman/Bloomberg

Neil Barofsky, who criticized the U.S. Treasury Department’s handling of taxpayer-funded bailouts as special inspector general for the Troubled Asset Relief Program, resigned effective March 30.

Barofsky, 40, said in a letter to President Barack Obama that he was stepping down to “pursue other opportunities,” saying his office had a “truly remarkable positive impact.” He said his office’s investigations led to 14 criminal convictions for fraud, recovered more than $150 million and avoided the loss of $550 million in fraud.

Since taking office as special inspector general in December 2008, Barofsky assailed the U.S. bailout of American International Group Inc., the Treasury’s housing loan-modification program, and the government’s decision to speed the pace of closings of General Motors Co. and Chrysler Group LLC auto dealerships.

TARP’s “most significant legacy” may be “the moral hazard and potentially disastrous consequences associated with the continued existence of financial institutions that are ‘too big to fail,’” Barofsky said in a report last month.

‘Personal Decision’

Barofsky’s resignation “was a personal decision based on a number of factors, including his desire to spend more time with his wife and 9-month-old daughter,” Barofsky spokeswoman Kris Belisle said in an e-mailed statement. Christy Romero, the deputy special inspector general, “will continue our important task of providing oversight.”

Romero was Barofsky’s chief of staff until today, when she and Geoffrey Moulton, who had been deputy special inspector general, switched jobs, Belisle said. As deputy, Romero may become acting special inspector general unless President Barack Obama designates someone else for the acting position. The permanent special inspector general for TARP must be nominated by the president and confirmed by the Senate.

Belisle declined to say why Romero and Moulton switched jobs effective the same day Barofsky announced his resignation.

In November 2009, Barofsky, a former assistant U.S. attorney, said TARP will “almost certainly” result in a loss to taxpayers.

Outlook Improved

Since then, the outlook for TARP has improved. The Congressional Budget Office, which at one point estimated that the bailout program would cost $350 billion, has lowered its projection to as little as $25 billion. Of the $700 billion Congress authorized for TARP in 2008, $410 billion was disbursed.

“Barofsky has provided strong oversight of the TARP program for the past two years,” White House spokeswoman Amy Brundage said in a statement.

The special inspector general “has the responsibility, among other things, to conduct, supervise and coordinate audits and investigations of the purchase, management and sale of assets” under the TARP program, according to the special inspector general’s website.

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