This is not the first time that Neil Barofsky, special inspector general of the Troubled Asset Relief Program, has harshly criticized the Treasury Department for its utter lack of transparency and accountability in administering the massive federal bank bailout. But in his latest quarterly report to Congress, the independent watchdog warns that total taxpayer support for the financial system increased by another $700 billion during the past year -- with precious little to show for it. Some of that increase went to supply capital to Fannie Mae and Freddie Mac so these quasi-governmental entities could continue guaranteeing mortgages and supposedly stabilize the housing market that they were so instrumental in causing to collapse.
But documents provided under subpoena to Congress show that toxic loan peddler Countrywide Financial provided multiple below-market mortgages to already excessively overpaid Fannie Mae officials, including Jim Johnson, Jamie Gorelick, Dan Mudd and Franklin Raines. "They made billions buying and selling each other's toxic loans," CBS investigative correspondent Sharyl Attkisson reported. Also among Countrywide's beneficiaries was Senate banking committee Chairman Chris Dodd, whose name informally graces the just-passed financial "reform" bill. He saved an estimated $75,000, thanks to a bargain-basement interest rate he got in 2003 from Countrywide.
Another $75 billion has been spent on the Home Affordable Modification Program, which was designed to reduce mortgage payments for an estimated four million people in danger of losing their homes.But Barofsky called HAMP's performance to date "anemic," pointing out that it "failed to put an appreciable dent in foreclosure filings." In fact, only 51,000 desperate homeowners entered the program in June, a one-year low, and less than the number that exited HAMP. "The American people are essentially being asked to shoulder an additional $50 billion of national debt without being told, more than 16 months after the program's announcement, how many people Treasury hopes to actually help stay in their homes ... [adding to] the growing public suspicion that the program is an outright failure," Barofsky said, noting that Treasury "has already jumped into the deep end of the moral hazard pool."
Rep. Darrell Issa, R-Calif., ranking Republican on the House Oversight and Government Reform Committee, charges that the Obama administration is treating TARP "like its own personal slush fund." This is the inevitable result when unaccountable bureaucrats are given secret access to public funds while Congress abrogates its oversight responsibilities. At this point, nothing short of a full-blown public investigation is likely to get at the full truth about this scandal. Unfortunately, that's probably the last thing the current Congress will ever do.