Banks to get TARP scrutiny
The chief watchdog for the U.S. Treasury’s $700-billion bailout will ask bank executives not only to describe how they are using the funds but also to certify their answers under threat of criminal penalties, he said in an interview Wednesday.
Neil J. Barofsky, special inspector general for the Troubled Asset Relief Program, said his intent was to shed more light on the workings of the widely criticized program. He already has lobbied successfully to have all TARP award agreements and vendor contracts posted publicly online.
“We want to bring transparency to areas that previously were dark so the American people, who have invested so much, can see what’s going on,” Barofsky said.
He was to release a 188-page report today on his efforts since he was appointed two months ago. The report says Barofsky also will require senior bank executives to certify under criminal penalty their plans for complying with the executive pay limits that the Obama administration will impose on TARP recipients.
The plans amount to a rewrite of TARP rules. Certified explanations of the use of TARP funds were not required when the first awards were made last fall, but they were included in a second round of funding, to Bank of America Corp. and Citigroup Inc.
Barofsky said he would conduct wide-ranging investigations of the process by which TARP recipients were selected and the uses they made of the money. He said he would announce one audit target today. Any lies or misrepresentations found in applications for TARP funds would also be grounds for criminal prosecution, he said.
Barofsky said he was working closely with other federal officials, including the main Treasury inspector general, who is conducting a separate review of how City National Corp. of Beverly Hills received a $400-million infusion.
Concerns by the Office of Management and Budget that Barofsky’s probe potentially might violate the 1980 Paperwork Reduction Act have been resolved, said Kristine Belisle, a spokeswoman for Barofsky.
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