Today, the House Financial Services subcommittee on oversight and investigations held a hearing to review accountability and transparency in the Troubled Assets Relief Program (TARP). During his testimony, Neil Barofsky, the Special Inspector General of the program, warned that if the Treasury Department is not “vigilant,” TARP could fall victim to fraud, much like the federal response to Hurricane Katrina or Iraq’s reconstruction:
History teaches us that an outlay of so much money in such a short period of time will inevitably draw those seeking to profit criminally. Hurricane relief, Iraq reconstruction, and the savings and loan bailout serve as important and difficult lessons. If, by percentage terms, some of the estimates of fraud in those programs apply to the TARP programs, we are looking at the potential exposure of tens if not hundreds of billions of dollars in taxpayer money lost to fraud. We must be vigilant.
This is a wise bit of advice, as billions were wasted during both the Katrina and Iraq reconstruction debacles. At the same hearing, Gene Dodaro of the Government Accountability Office (GAO) said that Treasury is taking steps to improve accountability “consistent with our recommendations,” but that “additional action is needed to better ensure that all participating institutions are accountable for their use of program funds.”