Obama 'Transparency' Is Called Into Question

Administration Not Opening Bailout, Health Care Data

July 21, 2009|By Tom Hamburger and Peter Wallsten | Tom Hamburger and Peter Wallsten,Tribune Newspapers

WASHINGTON - - As the watchdog of the government's huge bailout of the financial sector, Neil Barofsky had a simple question: What had the nation's banks done with all their bailout money?

Can't be answered, said the Treasury Department, because of the way banks move money internally. The department declined to put the question to the banks.

And so Barofsky started asking financial institutions himself, getting answers from more than 300 that had received federal bailout money and learning to what extent they had used the money to increase their lending, buy competitors or build their cash reserves.

The banking survey, and the refusal of Treasury officials to conduct it themselves, were revealed as Barofsky issued a stinging report Monday that complained of a lack of transparency in the Obama administration's management of the giant financial services bailout program.

The report came as critics of the administration say that the White House has fallen short of its promises to run a more open government than had other administrations. Among other areas, the critics cite the president's conduct of the health care debate, which has including closed-door White House meetings with powerful interest groups.

"You can't ask the basic questions or have a debate about the fundamental policy questions without information," Barofsky said in an interview.

"We fundamentally disagree with the Treasury Department on the importance of transparency," he said.

Increased transparency was a campaign pledge Obama made at every turn during the election campaign. As president, he said, he would invite television cameras into the negotiating sessions over health care. C-SPAN would record every word, Obama said, while he and members of Congress, as well as representatives of the health care industry, hashed out a plan to overhaul the nation's health care system.

The discussions have not played out that way. Obama has met repeatedly in the White House with congressional leaders to discuss health care strategy. No cameras, or reporters, have been allowed to cover the talks. The White House has announced deals, negotiated behind closed doors, with hospital and drug industry executives as part of its push to revamp health care.

A C-SPAN spokesman said Monday the network had covered an Obama administration health care forum on March 5 that was open to the entire press corps, and another one Monday - and that was it.

Linda Douglass, a spokeswoman for the White House, said the Obama administration is disclosing far more than its predecessors.

"The public has had much more of a window on the process of discussing these things with various interest groups than they've ever had before," Douglass said. "It could be that some meetings have certainly been in a private setting, but I don't know if the president had promised that every single conversation he has everywhere would be webcast."

Advocates for open government have been distressed by Obama's announcement in May that he would block release of photos showing U.S. troops mistreating prisoners in Iraq. They also criticized his efforts to conceal the names of visitors to the White House.

Barofsky, whose title is special inspector general for the Troubled Asset Relief Program, or TARP, said disclosing information to the public was important to the success of the bailout program.

In an interview and in his official report, Barofsky expressed particular concern about the public-private partnership to purchase toxic assets from banks.

All told, Barofsky estimated that the government's exposure under the financial services rescue program, also known as the TARP program, was nearly $24 trillion, a figure that Treasury officials said was exaggerated.

The total takes into account dozens of financial recovery programs set up by the Bush and Obama administrations, as well as by the Federal Reserve. The $24 trillion represents the worst case of the government's gross financial explosure.

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