Treasury watchdog keeping tabs on bailout

WASHINGTON - The Treasury inspector general assured lawmakers that he's monitoring the $700 billion financial rescue program while delays in Congress have stalled a permanent overseer.

Eric Thorson, the agency's internal watchdog, said his staff has been meeting with officials running the Troubled Asset Relief Program and will soon issue a report to Congress. While Thorson said his office is facing a growing workload because of increasing bank failures, he pledged to continue providing independent oversight as long as necessary.

"Allocating resources to TARP oversight is a challenge, given the many other audit and investigative duties of our office," Thorson wrote in a letter Tuesday to Senate Banking Committee leaders. "However, we are aware that American taxpayers are providing every dollar involved in this complex program, and we clearly understand the importance of having the confidence of the American people in administering it."

The Bush administration has proposed New York federal prosecutor Neil Barofsky to be the TARP special inspector general, and his nomination is pending in the Senate. Thorson was asked by the Treasury to monitor the rescue effort until a candidate is confirmed for the post.

Last week, Senator Christopher Dodd, chairman of the banking panel, said Barofsky's nomination had been blocked by at least one unnamed Republican senator.

That delay is regrettable and not in the best interest of American taxpayers, said Dodd, a Connecticut Democrat.

Lawmakers have criticized Treasury Secretary Henry Paulson for not giving them enough information about his TARP decisions.

Treasury has used almost all of the first $350 billion allocated by Congress, mostly for capital injections to banks and to rescue insurer American International Group and Citigroup Inc.