U.S. Sen Dodd to seek quick TARP watchdog approval

By Kevin Drawbaugh

WASHINGTON, Nov 19 (Reuters) - The Senate could move as soon as the end of the week to approve the nomination of New York lawyer Neil Barofsky as the official watchdog over the government's $700 billion bank bailout program, the chairman of the Senate Banking Committee said on Wednesday.

"This committee will try to deal with this as quickly as possible," said Connecticut Democrat Christopher Dodd at a committee hearing on Barofsky's nomination to be inspector general of the Troubled Asset Relief Program (TARP).

"It's up to the leadership to agree on whether this could move forward today or tomorrow," Dodd told reporters afterward.

An assistant U.S. attorney in the powerhouse Southern District of New York, the 38-year-old Barofsky was nominated by President George W. Bush to head the TARP.

Congress approved the program last month at the insistence of U.S. Treasury Secretary Henry Paulson as a way to stabilize the troubled financial system.

Originally aimed at buying distressed mortgage-backed securities that are clogging credit markets, the TARP has since shifted focus and Paulson is now buying preferred bank stock.

The abrupt shift in emphasis concerns many lawmakers. Some are criticizing a lack of program oversight and coherence, while suggesting there is little evidence that the program is working. Paulson has said the economic downturn would be much worse if not for the TARP's impact.

Barofsky is chief of the mortgage fraud group at the Southern District and was formerly lead prosecutor in its securities fraud unit. The Southern District often investigates and prosecutes America's most high-profile business scandals.

'A BIG MYSTERY'

As inspector general, Barofsky would have to report to the committee on TARP within 60 days after confirmation. He told the committee he would expect to meet that deadline.

"I hope you do because we have no information on who's getting what or how the money is being spent, who's benefiting from it, and so forth. It's a big mystery to all of us and it shouldn't be," said Alabama Republican Sen. Richard Shelby.

"I'm concerned that the Treasury's decisions continue to be made in an ad hoc manner with little direction," Shelby said.

The TARP called for $50 million to be spent on the inspector general's office. But senators suggested that may be too much money now that Treasury has walked away from its initial intent of complex, time-consuming asset purchases.

Barofsky said that he might need 100 people to do his job and that "$50 million is a large number. It doesn't mean that we're going to spend $50 million."

Kentucky Republican Sen. Jim Bunning pressed Barofsky for assurances that he would not stand for any interference from Treasury as he goes about overseeing the TARP.  Continued...