January 30,2009

Grassley urges OMB to get out of the way of Special IG for TARP

WASHINGTON – Senator Chuck Grassley today urged the President’s Director
of Management and Budget to knock down, rather than build hurdles to effective
oversight by the new Special Inspector General for the federal government’s attempted
rescue of the financial system.

In a letter sent this afternoon, Grassley asked Director Peter Orszag to stop any
efforts underway or excuses in the works to prevent Neil Barofsky, the Special Inspector
General, from initiating letters of inquiry to entities participating in the Troubled Asset
Relief Program and accessing portions of the $700 billion rescue program.

“The Office of Management and Budget has sent a terrible signal by creating all
sorts of red tape for the Special Inspector General to dig in to what’s happening with
TARP money, the taxpayers’ money and, in fact, by even meddling in the Inspector
General’s work at all,” Grassley said. “The whole point of an inspector general is to have
independent review and assessment of what’s going on. We all need the Special
Inspector General to be as effective as possible so that everyone can understand the
mistakes that have been made in managing the bailout and how to do a lot better job
going forward.”

Last week, Grassley applauded the new Special Inspector General signaling an
aggressive approach to achieving transparency with the TARP program. Last fall,
Grassley joined Senator Baucus and other senators in making a case that the legislation
that created TARP also include a Special Inspector General. Senator Grassley has
initiated numerous oversight inquiries regarding the implementation of TARP since last
fall. Grassley and Senator Claire McCaskill won Senate passage late last year (S.3731)
of legislation to strengthen the ability of the Special Inspector General to conduct
oversight of TARP. They will reintroduce a bill this year to secure necessary authority
for the Special Inspector General as their bill last year was never taken up by the House
of Representatives.

The text of Grassley’s letter to Orszag is below, along with the statement Grassley
issued last week about a Barofsky letter to congressional leaders. Barofsky’s January 22,
2009, letter is posted with this news release at http://finance.senate.gov and
http://grassley.senate.gov. A news release describing the Grassley-McCaskill legislation
is also below.

January 30, 2009

The Honorable Peter R. Orszag
Director
Office of Management and Budget
Eisenhower Executive Office Building
1650 Pennsylvania Avenue, NW
Washington, DC 20503

Dear Mr. Orszag:

Last week, Neil Barofsky, of the Office of the Special Inspector General for the
Troubled Asset Relief Program (SIGTARP) advised me and others of his intention to
undertake a significant oversight initiative to improve general transparency of the
Troubled Asset Relief Program (TARP). I praised that initiative.

This morning, in an effort to obtain a status update on that initiative, my staff
contacted Inspector General Barofsky (IG). In response to that inquiry, the IG noted that
an unexpected hurdle arose. More specifically, the Office of Management and Budget
(OMB) advised the IG that SIGTARP could not initiate its significant oversight effort to
improve the general transparency of TARP funds due to restrictions of the Paperwork
Reduction Act (“the Act”). In response to that requirement, the IG immediately
addressed a letter to you requesting “Emergency Processing” of its letter for recipients of
TARP funds.

OMB reacted quickly to the IG request noting that SIGTARP would not be
limited by the Act. However, moments after providing notice to SIGTARP that it would
be allowed to proceed with its letter of inquiry to TARP recipients, OMB withdrew the
emergency approval it had granted just a few minutes earlier.

It is my understanding that at this time, OMB is requiring SIGTARP to post a
proposed letter of inquiry to TARP recipients for 15 days, wait for comments, and then
justify to OMB that it has taken into account the public comments in redrafting the
inquiry letter. This is unacceptable. Every taxpayer who is being forced to pay the bill
here wants to know: “where did the money go?” SIGTARP was created to answer that
fundamental question, and OMB appears to be obstructing SIGTARP’s efforts to find out
the answer on behalf of Congress and the American people.

SIGTARP should not have to jump through bureaucratic hoops in order to gather
basic information that the government could have and should have required as a
condition of the receipt of TARP funds in the first place. That would merely lead to
unnecessary delay and obfuscation. For example, the comments would likely consist of
lengthy objections from those subjected to the inquiry. Moreover, reconciling those
objections would be a substantial undertaking with little if any return to the taxpayer. It
should be no surprise that those who accepted TARP funds may not be interested in
providing taxpayers with answers to the questions about where the money went. They
may very well much rather use their resources commenting on SIGTARP’s letter of
inquiry and diverting attention to arguments over whether the request for information is
burdensome.

This is very disturbing, especially in light of President Obama’s pledges of
unprecedented openness and transparency. OMB’s decision appears directly contrary to
this administration’s promise to administer TARP with a new level of transparency and
accountability never before seen in Washington.

I am not convinced that the Paperwork Reduction Act applies to the SIGTARP
under these circumstances. However, if OMB believes its hands are tied by the statute
and that there is no way of avoiding these delays without a legislative fix, then I would
have expected OMB to propose to Congress legislative language exempting SIGTARP
from the Paperwork Reduction Act. No such proposal has been made.

Please provide a detailed explanation of the facts and circumstances surrounding
OMB’s intervention to delay SIGTARP’s collection of information from TARP
recipients, including:

(1) a complete description of all communications between OMB, Treasury, and
SIGTARP officials related to this matter;

(2) a complete description of all communications between any government
officials and industry representatives related to this matter; and

(3) copies of any and all records reflecting such communications.

In light of the President’s commitment to transparency, I thank you in advance for your
prompt and complete response.
Sincerely,

Charles E. Grassley
Ranking Member

M E M O R A N D U M

TO: Reporters and Editors
FR: Jill Kozeny, 202-224-1308 for U.S. Senator Chuck Grassley of Iowa - Ranking Member of the Committee on Finance
RE: letter from the Special Inspector General for the TARP
DA: Thursday, January 22, 2009

Senator Chuck Grassley issued the comment below in response to the letter he
received today from Neil M. Barofsky, Special Inspector General for the Troubled Asset
Relief Program (TARP). The letter is posted with this statement at
http://finance.senate.gov and http://grassley.senate.gov.

Senator Grassley joined Senator Baucus and other senators last fall in making a
case that the legislation that created TARP also include a Special Inspector General.
Senator Grassley has initiated numerous oversight inquiries regarding the implementation
of TARP since last fall.

Senator Grassley’s comment:

“The mindset expressed by the Special Inspector General in this letter gives me
hope that greater transparency can be achieved for the taxpayers with the massive effort
to rescue America’s financial system. Lack of transparency, lack of accountability, and
taking advantage of others were major factors in creating the financial crisis. The rescue
effort won’t succeed if it’s got those same problems. I encourage the Special Inspector
General to be as aggressive as possible in achieving full disclosure of how TARP dollars
have been spent and will be spent so that program assessments can be made and future
actions are as effective as possible.”

For Immediate Release
November 19, 2008

SENATORS INTRODUCE BILL TO UPDATE AND STRENGTHEN OVERSIGHT OF BAILOUT FUNDS

WASHINGTON, D.C. – U.S. Senators Claire McCaskill (D-MO) and Chuck Grassley (R-IA)
today moved to tighten government oversight of the financial rescue plan approved by Congress
in October. The senators introduced a bill that would put in place provisions to better monitor
how the $700 billion dollars are spent by increasing the power and authority of the Special
Inspector General created to oversee the program.

The law was written based on the plan spelled out by the Treasury Department at the time, to buy
up troubled, toxic assets. Now that the Treasury plan has changed, the authority of the Special
Inspector General needs to be broadened. The McCaskill-Grassley bill will provide the
necessary fixes to ensure there is strong oversight in place.

“We voted on this measure thinking there would be responsible oversight of how the tax dollars
are being spent,” McCaskill said. “Instead, almost half the money has been doled out but no one
is watching to make sure that the government is spending it wisely. We need to fix this before
another cent is spent unsupervised.”

“The stronger the watchdog, the better, given the enormous stakes for the taxpayers with this
bailout package. Congress, the current administration and the new administration need to take
every step possible to make sure the sensibilities of Main Street are not violated as the $700
billion is used,” Grassley said.

The legislation will:

• Give the IG temporary hiring power. This will allow the IG to quickly begin hiring staff
without going through the normal civil service process which could cause a lengthy delay
in beginning oversight work. The temporary hiring power is modeled after the provisions
created for the Special Inspector General for Iraq Reconstruction (SIGIR) and will only
last for six months.

• Expand the authority of the IG to cover any and all action conducted as part of the
Troubled Asset Relief Program, including assistance to homeowners and foreclosure
mitigation efforts. Under the current language of the law, the IG’s authority would cover
only two sections of the relief program.

The senators are hopeful the legislation will pass the Senate unanimously before Congress
recesses for the year. Senators Susan Collins (R-ME) and Joseph Lieberman (I-CT) are cosponsors.

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