Bailout Oversight Blocked in the SenateDecember 3, 2008 - by Donny Shaw
When the Senate passed the $700 billion financial bailout bill, they included a provision that established a Special Inspector General at the Treasury Department to oversee the whole process and make sure that the taxpayers’ money was being used legitimately. In mid November, President Bush nominated Neil Barofsky, an assistant U.S. attorney from New York, to fill the position. Shortly thereafter, Barofsky’s nomination was approved by the Senate Banking Committee and the leadership of the Senate Committee on Homeland Security and Governmental Affairs, but according to Banking Chairmen Chris Dodd (D-CT), “the nomination was blocked on the floor by at least one Republican member.”
It’s now been almost three weeks since Barofsky’s nomination that the bailout program, TARP, has been operating without “a special watchdog to track and protect taxpayers’ dollars,” to use the words of the person most responsible for the position’s existence, Senator Max Baucus (D-MT). According to the bill text, the Special Inspector General is supposed to “conduct, supervise, and coordinate audits and investigations of the purchase, management, and sale of assets by the Secretary of the Treasury” under TARP.
As Paul Blumenthal of the Sunlight Foundation noted recently, secret holds, like the one being used to block the bailout IG, were mostly abolished during the most recent session of Congress. “The ”http://www.opencongress.org/bill/110-s1/show">Honest Leadership and Open Government Act mandated the disclosure of the identity of a senator secretly blocking a ‘measure or matter’ ‘not later than 6 session days’ after the initiation of the hold," said Blumenthal.
But since the Barofsky nomination came about while the Senate was in recess, the senator who is anonymously blocking his confirmation in the Senate is getting an extra long time period to remain in secrecy. According to Kagro X at the Congress Matters blog, because the Senate has been holding occasional pro forma sessions during their recess – ironically, in order to prevent presidential recess appointments – the secret senator will be forced to reveal their identity on Monday. That’s because If all goes as scheduled, that’s when the sixth session day since Dodd’s announcement of the hold will occur.
So, who is the secret senator blocking Barofsky’s appointment?
Suspicions have fallen on Senator Jim Bunning (R-KY), who is pictured above. At the Banking Committee’s hearing on the matter, Bunning said, “I wonder why taxpayers should have to pay $50 million to a watchdog who will have nothing to watch.” He added: “In his testimony earlier this week, Mr. Barofsky did not question Secretary Paulson’s unlikely interpretation of the bailout law. Now, that’s the money that is spent; if he does not question it, he will have little to do but watch the preferred stock positions mature.” And today, the AP contacted Bunning spokesman Mike Reynard, who refused to deny that Bunning was the senator who had placed the secret hold.
Whoever the secret Republican senator is, they will be required by law to reveal themselves to the Congressional Record on Monday (or whenever the sixth session day of the Senate occurs) by submitting a note in the following form:
>’I, Senator XXXX, intend to object to proceedings to XXXX, dated XXXX for the following reasons XXXX.’
Once their identity is revealed, Senate Majority Leader Harry Reid (D-NV) has two options if he wants to get Barofsy confirmed by the Senate: he can try to strike some kind of a backroom deal with the objecting senator in order to get the hold dropped, or he can try to push the nomination past the hold with a motion to proceed. Reid would most likely be able to muster the 60 votes he would need to approve that motion, and a cloture motion to end debate of Barofsky’s confirmation, but even then, the objecting senator can hold the floor for up to 30 hours to filibuster for each of those votes. If the objecting senator doesn’t have an allies to help him hold the floor, the filibuster probably would not last very long. But if they do, they can take turns and pretty easily use up a large amount of the Senate’s time.
The Senate will be back next week to deal with the Big Three bridge loan issue. After they deal with that, Harry Reid and the rest of the Senate is going to have to decide how badly they want oversight of the bailout program. Are they willing to go through a week of procedural bickering to finally get a vote on Barofsky’s nomination, or do they want to go home to start enjoying the holiday’s with their families?
According to a recent report from the GAO, currently the bailout is sorely lacking in oversight. The AP reports:
>The government must toughen its monitoring of the $700 billion financial bailout to ensure that banking institutions limit their top executives’ pay and comply with other restrictions, federal auditors said Tuesday in the first comprehensive review of the rescue package.
>The Treasury Department has no mechanism in place to track how institutions are using $150 billion in taxpayer money that the government injected into the banking system as of last month, the Government Accountability Office concluded in its report to Congress.
>The auditors acknowledged that the program, created Oct. 3 to help stabilize a rapidly faltering banking system, was less than 60 days old and has been adjusting to an evolving mission.
>But the 72-page report was bound to feed congressional concern that banks and other institutions are not being properly monitored and are not using the money to increase lending.
UPDATE: from the Crypt:
>The anonymous hold on Neil Barofsky, the Bush administration’s TARP special IG, was lifted late Wednesday, according to Chuck Schumer. That clears the way for quick voice vote on his nomination.