WASHINGTON — He was appointed with fanfare in December as public watchdog over the government's multibillion-dollar bailout of the nation's financial system. But now Neil Barofsky, inspector general of the Troubled Asset Relief Program, is embroiled in a dispute with the Obama administration that delayed one recent inquiry and sparked questions about his ability to investigate without interference.
The Treasury Department contends that Barofsky does not have a completely independent role. That claim prompted a stern letter from a Republican senator, who warns that Obama administration officials are encroaching on the integrity of an office created to protect taxpayers.
Sen. Charles E. Grassley (R-Iowa) wrote to Treasury Secretary Timothy F. Geithner on Wednesday, demanding information about a "dispute over certain Treasury documents" that he said were being "withheld" from Barofsky on a "specious claim of attorney-client privilege."
The dispute comes as Grassley, ranking Republican on the Senate Finance Committee, is looking into the abrupt firings of two other inspectors general -- one by the White House, the other by the chairwoman of the International Trade Commission.
Both had investigated sensitive subjects. One, Gerald Walpin, had investigated a nonprofit founded by Sacramento Mayor Kevin Johnson, a supporter of President Obama. Walpin's case has become a cause celebre in conservative circles.
But the Treasury dispute is especially sensitive because Barofsky had been hailed for his credentials -- an experienced former prosecutor whose presence would reassure the public that TARP money would not be wasted. Obama has pledged transparency as his administration monitors the flow of money.
But TARP critics accuse some recipients, including American International Group Inc., of using the money improperly -- such as on lavish compensation packages.
It was not clear from Grassley's letter what specific inquiry was delayed by Barofsky's dispute with Treasury.
The senator included an April memo from the inspector general containing blacked-out sections. In that memo, Barofsky resisted what he viewed as an overreach by Treasury officials. Congress had a "clear intention to preserve [the inspector general's] independence and not subject us to the [Treasury] secretary's ability to shut down an audit or investigation," Barofsky wrote.
