Top TARP auditor Barofsky resigns as banks struggle to repay

File photo of TARP Inspector General Neil Barofsky.

Neil Barofsky was frequently critical of the way the Federal Reserve and TARP operated together. (Photo Credit: CC BY-ND/Duff McDonald/New York University School of Law Blog)

As the $700 billion Troubled Asset Relief Program winds down, a surprise defection occurred, reports Reuters. Neil Barofsky, inspector general of TARP and the top financial industry bailout auditor, handed President Obama his resignation letter. Barofsky, who will leave his post March 30, did not give a reason for his resignation.

Inspector General Barofsky appointed by President George W. Bush

Appointed in November 2008 at the height of the financial crisis, Barofsky, 40, served for more than two years. In his resignation letter to President Obama, Barofsky wrote that it “has truly been an honor to serve, particularly during such a critical time.” His dedicated service in pursuing fraud allegations, as well as pointing out where the TARP program fell short of expectations, earned Barofsky respect among his peers.

Under Barofsky’s direction, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) grew to 140 staffers, from auditors and investigators to attorneys and others. Currently, SIGTARP continues to operate regional offices in New York, San Francisco, Los Angeles and Atlanta.

As long as banks owe, TARP will live on

TARP no longer has official jurisdiction over new spending programs, and the U.S. Treasury is weaning financial firms and automakers from Federal Reserve investments. Still, because so many banks continue to struggle making payments on their massive installment loans, TARP’s mission is ongoing. Christy Romero, who will take over at least on an interim basis for the departing Barofsky, will continue to work with the 150-plus TARP banks that have missed regular installment loan payments. In addition, the largely unsuccessful Home Affordable Modification program continues to require oversight, said Barofsky, as foreclosures have not abated significantly.

The money is there; manage it wisely

Barofsky’s parting advice to the Obama administration and the Federal Reserve is to manage with care the taxpayer money that remains on the TARP table.

“With more than $150 billion in TARP funds outstanding and close to $60 billion still available to be spent, robust and effective oversight of TARP remains vitally important,” Barofsky wrote.

In addition to the billions of dollars in installment loan payments delinquent TARP banks owe, an Obama administration forecast indicates that the administrative costs of TARP will exceed $28 billion.

Sources

Reuters

SIGTARP

Barofsky grants a window into Federal Reserve mismanagement

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