Dispatches from the Creation Wars

Greenwald writes:

Barofksy's clashes with administration officials have intensified of late. Last week, he issued a report documenting that the actual amount of taxpayer money theoretically put at risk in the bank bailout -- once Federal Reserve, FDIC and other programs are counted -- is $23.7 trillion, not the widely cited figure of $700 billion, a report that prompted attacks from the White House and Treasury on his credibility. Separately, Barofsky has continuously disputed White House claims that it's impossible to account for what has been done by banks with the TARP funds. Barofsky wants to compel banks to account for those funds and then publicize that information, while the administration opposes such efforts, claiming that accounting for TARP monies is impossible due to the "fungibility" of those funds. To disprove that claim, Barofsky sent out voluntary surveys to the bank which proved that those funds could be tracked (and he found TARP funds were being used by receiving banks largely to acquire other institutions and/or create "capital cushions" rather than increase lending activity, the principal justification for TARP).

Most significant of all, and obviously due to Barofsky's truly independent oversight efforts, the Obama administration is now attempting to induce the Justice Department to issue a ruling that Barofsky's office is not independent at all -- but rather, is subject to, and under the supervision of, the authority of Treasury Secretary Tim Geithner. By design, such a ruling would completely gut Barofsky's ability to compel transparency and exercise real oversight over how Treasury is administering TARP, since it would make him subordinate to one of the very officials whose actions Congress wanted him to oversee: the Treasury Secretary's. Barofsky has, quite rightly, protested the administration's efforts to destroy his independence, and has done so with increasing assertiveness as the administration's war on his oversight activities has increased. Why would an administration vowing a New Era of Transparency wage war on a watchdog whose only mission is to ensure transparency and accountability in these massive financial programs?

It should take little effort to explain the significance of these clashes. The amount of taxpayer money transferred to the banking industry or otherwise put at risk for its benefit is astronomical. Professor Nouriel Roubini argues in a New York Times Op-Ed today that actions by the Federal Reserve over the last nine months helped avert a Depression, while former Governor Eliot Spitzer said this week that the Fed has turned into a "Ponzi scheme" that relies on insider dealing and requires vastly increased scrutiny. Those claims aren't mutually exclusive. It's not surprising that transferring extraordinary sums of taxpayer money to a particular industry will help that industry avoid collapse, but it is still the case that the potential for extreme corruption and even theft in such transactions is enormous (indeed, even Roubini argues that Fed Chairman Ben Bernake played an important role in enabling the crisis in the first place). No matter one's views of the wisdom of the bailout and related programs, transparency, accountability and independent oversight are absolutely vital, and that is what Barosksy's office was created to ensure (though it's unlikely -- given how Washington works -- that Congress actually expected that the person in charge of that office would take those duties seriously and be willing to fight with senior administration officials to protect his independence).

Ironically, that DOJ opinion that Obama is seeking is based on the exact same "unitary executive" theory that Bush pushed so hard for and liberals hated so much. The unitary executive theory was never really about unlimited executive power, as it was portrayed in the press, it was about whether Congress could create a position within the executive branch, such as a special prosecutor or an inspector general, that was not under the direct control of the president.

Why is this important? Because if you give the executive branch the authority to fire inspectors general or special prosecutors who are tasked with important oversight duties, they can fire those whose job is to provide accountability for executive actions. You know, like Nixon tried to do by firing the independent prosecutor investigating Watergate.

Meet the new boss....same as the old boss.