A former Treasury official has told the watchdog for the $700 billion Wall Street bailout program that President Obama’s promise to restrict lobbyist access to the bailout was made purely for political reasons.
Months after the administration’s pledge, the lobbyist rules haven’t been implemented and Neel Kashkari, the one-time czar of the agency’s Troubled Asset Relief Program, told the office of the special inspector general for TARP that the pledge to craft safeguards against lobbyist influence was a defensive move.
“Mr. Kashkari believed that this statement was purely for political reasons with Obama’s new entering administration, and that there was no substantive reason for this announcement,” the office wrote in a document obtained by The Washington Times in which the inspector general recounted Mr. Kashkari’s April 30 interview with the auditors.
“He noted that, at that time, there had been headlines in the press regarding lobbyists influencing the process, and Treasury wanted to show that they were taking action,” the inspector general’s office wrote.
Mr. Kashkari, a former executive at Goldman Sachs who was tapped in October by Treasury Secretary Henry M. Paulson Jr. to oversee the distribution of TARP cash to vulnerable firms, stepped down in April after serving under the Obama administration since January. Attempts to reach Mr. Kashkari for comment on this report were unsuccessful.
In January, amid concerns that lobbyists would sway TARP decisions, the Treasury Department pledged to write rules to restrict their access, acting “in light of President Obama’s firm commitment to transparency, accountability and oversight in our government’s approach to stabilizing the financial system.”
More than six months later, the rules have not been issued.
A Treasury official, speaking on the condition of anonymity, said the rules have been submitted to the White House but could not comment on their status.
The White House did not return messages seeking comment.
TARP’s secrecy has been a point of contention for congressional lawmakers on both sides of the aisle.
Rep. Darrell Issa of California, the senior Republican on the House Oversight and Government Reform Committee, described the lack of lobbying rules as an example of the Obama administration “saying one thing while doing another.”
“It’s very apparent that the talk about curbing and limiting lobbyist influence was nothing more than smoke and mirrors in an effort to mislead the American people into believing their tax dollars would be protected,” Mr. Issa said.
“The Treasury Department has actively obstructed our ability to determine what the true value of the TARP investments are worth and what TARP recipients are doing with taxpayer dollars. Until we have full transparency, we will never be able to know how much risk Treasury is assuming on behalf of the taxpayers,” Mr. Issa said.
At a July hearing before the oversight committee, Rep. Edolphus Towns, New York Democrat and the committee chairman, threatened to subpoena Treasury Secretary Timothy F. Geithner to testify.
Mr. Towns demanded that Treasury give a full accounting of how TARP funds have been used and to make public the monthly reports that the biggest banks are required to submit to Treasury showing the dollar values of their new loans.
Treasury has pumped about $200 billion in TARP funds into failing banks, and nearly $70 billion of that has been repaid.
Mr. Kashkari told the government auditors in April that part of the reason the rules hadn’t been issued was because the department was sorting through First Amendment concerns that could be involved in restricting lobbyist communications.
While heading TARP, he had received calls from members of Congress, he said, but he was certain there was no undue influence on Treasury’s decisions.
In an Aug. 6 audit report, the inspector general’s office said it hadn’t found any evidence of lobbying having influenced TARP decisions, but that limitations on Treasury’s record-keeping made it impossible to be certain of that.