ABC News’ Jake Tapper & Matthew Jaffe report: Neil Barofsky, the top watchdog for the government’s controversial $700 billion bailout program, announced Monday that he plans to resign next month.
In a letter to President Obama, Barofsky said he will step down on March 30 as the Special Inspector General for the Troubled Asset Relief Program, known as SIGTARP.
Barofsky touted his office’s oversight work over the past several years, but said now it was time to move on.
“All told, I am very pleased to report that SIGTARP has had a truly remarkable positive impact for an office of such a small size and recent creation,” he said. “With my initial goals met and with these particular accomplishments in mind, and after more than 10 years in continuous Government service, I believe that it is the right time for me to step down and pursue other opportunities.”
Some of those accomplishments, he said, include reporting on “TARP’s successes and failures in easy-to-understand terms while putting TARP into perspective as only a part of the multi-trillion dollar Government effort to stabilize the financial system.” Barofsky also touted his office’s work in bringing attention to the “long-term, nonfinancial costs of TARP, including harm to the Government’s credibility and the very real dangers that plague our financial system with the continued existence of large financial institutions still deemed “too big to fail.”
Barofsky claimed that today the bailout “stands in a far better and more transparent place today than anyone could have reasonably hoped in December 2008.” The program is now set to cost taxpayers far less than previously projected, in part, Barofsky said, because the Treasury Department had adopted SIGTARP’s recommendations about the program’s design against fraud vulnerabilities.
However, the watchdog reiterated his repeated arguments that the key aspects of the bailout remain flawed. Specifically, the administration’s foreclosure prevention program – known as HAMP – has “so far fallen far short” of its stated goals of preserving homeownership.
A source told ABC News simply decided that personally it was a good time to move on amidst a desire to return to leading a normal life.
For now the bailout oversight work will fall to Barofsky’s deputy Christy Romero.
Members of Congress quickly touted the departing Barofsky’s work as watchdog of such a controversial program.
“The passage of TARP signaled a pivotal moment at a time of great uncertainty and no one has been more dedicated to protecting the American people’s tax-dollars from waste, fraud and abuse than Neil Barofsky,” said Rep. Darrell Issa, chairman of the House Oversight Committee. “The fact of the matter is the work that Mr. Barofsky has begun is far from complete. It is imperative that the next IG pick-up immediately where Mr. Barofsky left off.”
For the past few years Barofsky had been a consistent thorn in the side of the Obama administration, releasing one critical report after another.
In a report to Congress released just last month, Barofsky had warned that the problem of “too big to fail” has not yet been solved, even with the Wall Street reform law signed last summer.
“The continued existence of institutions that are “too big to fail” — an undeniable byproduct of former Secretary Paulson and Secretary Geithner’s use of TARP to assure the markets that during a time of crisis that they would not let such institutions fail — is a recipe for disaster,” he said. “These institutions and their leaders are incentivized to engage in precisely the sort of behavior that could trigger the next financial crisis, thus perpetuating a doomsday cycle of booms, busts, and bailouts.”
The very next day Barofsky emphasized to Issa’s House Oversight panel that future bailouts could occur if the government does not act to reduce the size of these “too big to fail” banks.
“They need to have the regulatory will and the political will to rein in the size of these banks,” he said. “If they don’t have the credibility that they will not be bailing out institutions going into the future, it almost won’t matter otherwise because again those incentives will still be warped, that discipline will still be gone, and those risks where the idea the taxpayer will bail out the executives, the shareholders, the counter parties will continue a perversion of the system.”
Barofsky is not the only bailout watchdog to move on from his post. Last year Elizabeth Warren left her role as head of the Congressional Oversight Panel to go work for the administration in shaping the new consumer financial protection office.