Bailout watchdog nominee touts experience

Neil Barofsky, nominee to be the special inspector general for the financial system bailout, told senators on Monday that he is qualified for the position and committed to ensuring the asset relief program is managed in the most responsible way for the taxpayers.

Barofsky, an assistant U.S. attorney for the Southern District of New York, is chief of the district's Mortgage Fraud Group. That position, along with previous experience, he told the Senate Finance Committee, qualifies him to oversee the $700 billion bailout.

"I believe my experience … has given me a vital education in understanding some of the root causes of the current financial crisis, as well as the securities and derivative instruments whose decline in value has been such an important part of it," Barofsky told the Senate Finance Committee. "It also has given me the tools to identify the markers of fraud throughout the financial industry, the necessary expertise in investigating such frauds, and, of course, the experience of establishing a plan of attack on those committing these frauds."

It was determined Monday that the Senate Banking Committee will have jurisdiction over Barofsky's confirmation, but Finance Committee members said they had a vested interest in ensuring he was a qualified candidate. The special inspector general likely will be reporting to a number of committees yet to be determined. The Banking Committee will hold a confirmation hearing for Barofsky on Wednesday at 9:30 a.m.

Finance Committee Chairman Sen. Max Baucus, D-Mont., and ranking member Sen. Chuck Grassley, R-Iowa, said they would push for a quick confirmation. Baucus noted that almost half the $700 billion for the program already has been allocated, and it is "way past the time" when someone should have been overseeing the program.

"A vacuum has been created by the delay in filling this position," Grassley added. "We need to fill that vacuum now."

Barofsky said he would move quickly to build his staff and use the $50 million at his disposal to fulfill the special IG's audit and investigative functions, as well as the requirement to report to the relevant committees within 60 days of confirmation and every 120 days thereafter.

One of his biggest challenges would be to coordinate his oversight duties with that of the multiple other executive and legislative branch entities policing the bailout program. But Barofsky said he would work to ensure a "comprehensive approach."

The language in the bailout bill outlines the scope of the special inspector general's responsibilities. But some expressed concern that it did not explicitly give the IG authority to demand information from agencies and industry to fully exercise audit and investigative functions. Baucus disagreed and urged Barofsky to assume he would have all the authority he needed.

"I want you to assume that you do have it and you go ahead until someone raises a ruckus and says no, and even then I want you to continue and assume that you have it," Baucus said. "I want you to have the tenacity of a mongoose or, as some say, the tenacity to be as mean as a junkyard dog."

Barofsky said instead of using "empty words" he would point to his career as proof of his qualifications to be an effective IG in overseeing the Treasury Department's management of the program and the recipients of bailout funds.

"Whether it was attacking the FARC in the jungles of Colombia or Refco on Wall Street, all I've done is go after those who violate the law, and I will take that same tenacity and dedication to this job," he said.