More accountability

Wednesday, July 22, 2009 | 2:08 a.m.

When Neal Barofsky, the special inspector general overseeing the federal economic bailout plan, asked the Treasury Department how banks were spending the money, he received an odd answer. The Treasury Department couldn’t say exactly how the money was being spent because of the complicated way banks handle money. The department also had no intention of asking the banks for an accounting.

Barofsky then asked the banks and found that, despite what the Treasury Department had said, many were able to explain how they were using the federal bailout money.

Go figure.

The Treasury Department’s failure to oversee the bailout program was the focus of a report Barofsky issued Monday and his subsequent testimony to Congress. Barofsky said the department had failed to follow repeated recommendations by his office that would create “the highest degree of accountability.”

Congress authorized $700 billion of taxpayer money to stabilize the financial markets, yet the public doesn’t know what the money was used for or how well the program has worked.

“You can’t ask the basic questions or have a debate about the fundamental policy questions without information,” Barofsky told the Los Angeles Times in a Tuesday story.

The program has largely been shrouded in secrecy since the start. The law doesn’t demand any type of rigorous accountability. George W. Bush, who as president called for the creation of the bailout program, essentially shrugged his shoulders and never demanded that financial institutions be called to account for how they spent taxpayer money.

Barofsky said the Treasury Department’s “default position should always be to require more disclosure rather than less.”

Instead, the Treasury Department’s default position has been to continue with the status quo, and that is unacceptable.

President Barack Obama pledged greater transparency and accountability in government, and his administration has taken steps in many areas to do so. However, there is more work to be done. The president should order the department to collect regular reports from banks that receive bailout money and make that information public.