Tags: barofsky | tarp | fraud

TARP Watchdog: Billions in Bank Fraud Possible

By    |   Wednesday, 25 Feb 2009 09:30 AM

Neil Barofsky, the White House-appointed watchdog over the $700 billion Congress-approved bank rescue, warns that the so-called TARP money is ripe for fraud.

The special investigator general for the Troubled Asset Relief Programs told Congress in testimony that rip-offs and misuse could cost billions in taxpayer dollars.

"We are looking at the potential exposure of tens if not hundreds of billions of dollars in taxpayer money lost to fraud," Barofsky said.

"History teaches us that an outlay of so much money in such a short period of time will inevitably draw those seeking to profit criminally."

His office is already looking into reported abuses across the country, Barofsky said. Congress has approved and released more than half of the initial $700 billion, and many billions more are being distributed now under the watch of President Barack Obama.

"We have already opened several criminal investigations involving multiple jurisdictions. We have also teamed up with the SEC, and have provided assistance to them in shutting down a securities fraud scam in Tennessee that had reaped millions by illegally trading on the TARP name," Barofsky said.

The Treasury Department has begun receiving reports from banks explaining how the federal bailout money will be used. So far, 17 of 350 banks have responded to requests for information. Full reports are due in March, Barofsky said,

Earlier this week, Congressional leaders publicly excoriated Chicago’s Northern Trust for bankrolling millions on parties following a golf event that featured top musical acts, ritzy hotel stays, and Tiffany jewelry given to some female guests.

Northern Trust got $1.6 billion in taxpayer bailout funds, money it did not solicit in the first place under the initial phase of TARP. Now some Congressmen want the money back.

A Northern Trust spokesman told gossip Web site TMZ that the money spent came from “operating expenses” and not from the bailout funding.

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Neil Barofsky, the White House-appointed watchdog over the $700 billion Congress-approved bank rescue, warns that the so-called TARP money is ripe for fraud.The special investigator general for the Troubled Asset Relief Programs told Congress in testimony that rip-offs and...
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2009-30-25
Wednesday, 25 Feb 2009 09:30 AM
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