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Jake Tapper on the Latest IG Scandal

Jake Tapper reports:

ABCNews’ Jake Tapper & Matt Jaffe report

The Obama administration’s disputes with government watchdogs do not end with fired Inspector General Gerald Walpin.  Behind the scenes, the Treasury Department is embroiled in a disagreement with Neil Barofsky, the watchdog for the $700 billion government bailout Troubled Asset Relief Program, or TARP.

The dispute was revealed in a letter that Sen. Chuck Grassley, R-Iowa, sent on Wednesday to Treasury Secretary Tim Geithner, first reported by the Los Angeles Times’ Peter Wallsten.

As part of his duties performing audits and keeping tracking TARP dollars, Barofsky asked the Treasury Department for some documents about a financial institution receiving tens of billions in taxpayer bailout dollars. The Treasury Department refused to hand them over, “on a specious claim of attorney-client privilege,” Grassley wrote. “It is my further understanding that this disagreement then escalated into broader questions about whether SIGTARP is subject to your direct supervision and direction, which may have been referred outside Treasury for an independent legal opinion.”

I’m not sure which financial institution they’re talking about, but going through the New York Times archives, it looks like A.I.G. could be the target here.  And from the Times article back in March, it was Democrats who were demanding that  Barofsky look into A.I.G.’s bailout.  An excerpt:

Members of Congress and the New York State attorney general demanded detailed information Thursday on how tens of billions of taxpayer dollars flowed through the American International Group during its crisis last fall and ended up in the coffers of several dozen big banks, shielding them from losses.

The new inquiries shine a spotlight on a question that is exponentially bigger, in dollars, than the $165 million in bonuses that A.I.G. paid out this month, but which has been overshadowed until now by the uproar over the bonuses.

”We would like to know if the A.I.G. counterparty payments, as made, were in the best interests of the taxpayers who provided the funding,” said Representative Elijah E. Cummings, Democrat of Maryland, in a letter to Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program. The letter was also signed by 26 other members of the House, all of them Democrats.

The representatives asked Mr. Barofsky to find out who had made the decision to shield A.I.G.’s trading partners from any losses during last fall’s crisis, and what factors had shaped the decision.

Their letter mentioned that Mr. Barofsky’s office had been created to investigate the uses of TARP money, and that A.I.G., the biggest recipient of government aid in recent months, was among the largest recipients of money from the TARP.

If this new matter is on A.I.G., it looks to be impossible for Democrats to try to smear Barofsky as some sort of Republican lackey, as they are with Gerald Walpin.  As a matter of fact, the New York Times reported that Barofsky’s appointment as IG for TARP was a rare showing of bipartisanship after President Obama won the election:

Proving that the intragovernmental bitterness is not fading with the end of Mr. Bush’s presidency, Jim Manley, a spokesman for Mr. Reid, said Mr. Bush had only himself to blame for Mr. Reid’s maneuver. “The only reason why we got into this situation was because of the complete unwillingness of the president to treat Congress as a co-equal branch of government,” he said.

Tony Fratto, a spokesman for Mr. Bush, said the president might have been inclined to make outgoing recess appointments were it not for Mr. Reid’s legislative blockade.

“Given the fact that the Senate was so intransigent on so many nominations, we certainly would have liked to have used the option of recess appointments,” Mr. Fratto said. “This process is broken, absolutely broken. The majority leader has taken it to the point of abuse.”

But there are some areas of cooperation that would preclude the need for recess appointments. Democratic leaders support the confirmation of Mr. Bush’s choice as the inspector general overseeing the allocation of money for the economic bailout plan, Neil M. Barofsky, a federal prosecutor from New York.

As I’ve written before.  There’s a real easy solution to all this.  Let’s get someone both parties can agree on, say Patrick Fitzgerald, and have him sort it out.

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