IG Says $750B Bailout Invites Fraud, Feds Open 20 Criminal Probes
A $750 billion taxpayer-funded federal financial bailout program is vulnerable to abuse, a special inspector general overseeing the program says in a 247-page report released today, calling for the Obama administration to rethink its planned sale of so-called toxic bank assets in securitized bundles.
The entire Troubled Asset Relief Program 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,” says Neil Barofsky in the report. A few corrupt managers who see a personal benefit in gaming the system, he says, is all that is needed to pull off such schemes, reports the Los Angeles Times.
Federal investigators announced yesterday that they are presently pursuing 20 criminal investigations concerning the bailout, related to possible securities fraud, tax violations, insider trading and other criminal conduct, the newspaper article continues.
“I would guess that 20 investigations, while a good start, is only the tip of the iceberg,” says Sen. Tom Coburn (R-Okla.), the ranking GOP member of the Senate Permanent Subcommittee on Investigations. It is also looking into the way the $750 bailout program is being administered.
Additional coverage:
ABAJournal.com: “Recipients of TARP Bailout Funds Could Be Targeted in Criminal Cases”
Bloomberg: “Audit Cites $900 Million Loss on Citigroup Assets”
Palm Beach Post: “Neil Barofsky, TARP’s top cop, has Boca Raton roots”
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