Feds Running 20 TARP Fraud Investigations

Neil Barofsky, the special inspector general overseeing the Troubled Asset Relief Program [TARP], just released a 247-page report that says his office is looking into wrong-doing by those whose firms have received some of the $750 billion bail-out money. Mr. Barofsky is pursuing 20 different criminal cases involving securities fraud, tax violations, and insider trading. He explained the TARP is “inherently vulnerable to fraud, waste and abuse, including significant issues relating to conflicts of interest facing fund managers, collusion between participants, and vulnerabilities to money laundering.” The same with the war in Iraq-Nam, so where are the criminal investigations there?

One of the tenets of conservative thought is that mankind is generally corrupt and that, if there is a big pile of taxpayer money, much will get diverted to places it shouldn't go. It is certainly true that there are corrupt individuals, and as Mr. Barofsky noted, “You don't need an entirely corrupt institution to pull one of these schemes off. You only need a few corrupt managers whose compensation may be tied to the performance of these assets in order to effectively pull off a collusion or a kickback scheme.”

However, denying the financial system the help needed to salvage what is left of the Republican-wrecked economy it supports because of corruption is tossing the baby out with the bathwater. For far too long, Wall Street crooks have been offered deals whereby they pay a fine, deny any wrong-doing and promise not to do it again. Actual criminal prosecutions of those who have stolen taxpayer money will deter others who might succumb to temptation.

It is also likely that these 20 cases are just the start. One can't believe that only 20 crooks work in financial institutions. Further inquiries are coming from the Senate Permanent Subcommittee on Investigations. Tom Coburn (R-OK), ranking GOP member on that subcommittee, said, “It shouldn't be a big surprise that a huge pot of honey attracts a lot of flies. I would guess that 20 investigations, while a good start, is only the tip of the iceberg."

Meanwhile, the Inspector General of the Department of Defense in March 2008 noted that contracting fraud is one of many areas “that have dropped in priority and have largely been neglected . . .in need of additional DCIS commitment.” It added, “Defective pricing, cost and labor mischarging [sic], product substitution, and other economic crimes . . . threaten DoD’s financial well-being and endanger lives.” So, why did the number cases the Justice Department pursued under the Busheviks fall 76% from the level of the Clinton years? And more importantly, what is the Obama administration doing to clean up corruption in defense? Anybody? Anybody?

© Copyright 2009 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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