Panel questions oversight of bailout

WASHINGTON -- The federal official policing how the $700 billion financial rescue package is spent told Congress on Wednesday that he is investigating whether political pressure affected the distribution of the money.

Neil Barofsky, the rescue package watchdog, said he will report his findings on "what impact, if any, that lobbyists or other outside influences have had" on the Treasury Department's spending of the money.

Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP), told a House oversight subcommittee he was working to aggressively identify and prevent fraud and waste in the massive program.

Barofsky's message for recipients: "If you try and steal from this program, we will find you. We will investigate you. We will put you in jail."

Rep. Dennis Kucinich, D-Ohio, the panel's chairman, said after the hearing he's glad Barofsky is looking at the possibility of lobbyist influence over the spending.

"The problem with TARP from the beginning is that it puts the government in the position of picking winners and losers," Kucinich said. "Certainly, the possibility of outside influence, namely lobbyists, is always present. This is Washington, D.C., not Disneyland."

Nearly 500 banks have gotten government investments from the program, which also has provided tens of billions of taxpayer dollars to prop up insurer American International Group and automakers General Motors and Chrysler.

Outside pressure had no role in decisions to distribute the $325 billion from the program that has been spent so far, said Neel Kashkari, the Treasury Department official coordinating the rescue.

After he took office in January, Treasury Secretary Timothy Geithner announced he would restrict lobbyists' ability to contact the department about applications for or spending of rescue funds.

Kashkari said the department has heard from officials, such as members of Congress and governors, about the rescue plan but decisions on doling out the money were made based only on economics, not politics.

"I'm confident in saying there's no undue influence at Treasury," Kashkari said.

Members of the House panel from both parties criticized the department for not demanding and making public more detailed information about how recipients are spending the rescue money. Barofsky noted in response to questions that he is investigating the $3.6 billion in bonuses Merrill Lynch executives got last year just before Bank of America bought the brokerage house with the help of government money.

"The people back home are madder than hell about what's going on, and they deserve to have all the facts," said Rep. Dan Burton, R-Ind.

Kashkari said he believes that recipients of rescue funds "have a moral obligation to give the American people as much information as possible." But he said the government should not "micromanage" the firms.