The prosecutor named to monitor the $700 billion bailout program said Wednesday that the Treasury Department's retreat from the program's original mission would not hurt his authority.
Secretary Henry Paulson said last week that the Treasury would not pursue the original goal of the Troubled Asset Relief Program (TARP) buying toxic mortgage-backed securities and would use its broad authority in the law establishing the bailout to invest directly in banks.
Neil Barofsky, an assistant U.S. attorney for the Southern District of New York, named Friday as TARP's special inspector general, assured senators at his confirmation hearing that his authority would also extend to the equity stakes.
"I believe that the jurisdiction and authority that's set forth in the statute for the special inspector absolutely applies to the capital purchase program," he told members of the Senate Banking Committee.
Some senators raised questions over Barofsky's authority to oversee the program, which includes $50 million to fund his office, in light of the Treasury's policy change.
"I wonder why taxpayers should have to pay $50 million to a watchdog who will have nothing to watch," said Sen. Jim Bunning, R-Ky. Sen. Chris Dodd, D-Conn., the panel's chairman, concurred with the nominee that his authority would not be undermined.
"I wouldn't want the Treasury officials or others to in any way constrain your ability to do your job when it comes to this program," Dodd said. "I believe you have that authority, and you should exercise that authority, and if someone tells you you don't have that authority, you let me know immediately."