Wednesday, February 25, 2009

Those that go oobatz get pinched

FEBRUARY 25, 2009
Wall Street Journal

WASHINGTON -- The U.S. government's rescue of the financial system is vulnerable to fraud that could potentially cost taxpayers tens of billions of dollars, government watchdogs warned lawmakers Tuesday.

Neil Barofsky, the special inspector general for the $700 billion Troubled Asset Relief Program, told a House subcommittee that the government's experiences in the reconstruction of Iraq, hurricane-relief programs and the 1990s savings-and-loan bailout suggest the rescue program could be ripe for fraud.

He also said fewer than 5% of banks receiving government aid have responded to a request about what they have done with their bailout money.

"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," Mr. Barofsky said.

The Treasury Department "has yet to develop comprehensive written policies and procedures governing TARP activities or implement a disciplined risk-assessment process," Mr. Dodaro said.

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