Senate Block of TARP Watchdog Lifted

WASHINGTON (Reuters) – The unnamed U.S. senator who had blocked approval of the Bush administration’s choice to be internal watchdog of the government’s $700 billion bank bailout program has relented and fast approval of nominee Neil Barofsky is now expected, Senate aides told Reuters on Wednesday.

Barofsky, an assistant U.S. attorney in the Southern District of New York, had a fairly smooth nomination hearing before the Senate Banking Committee on Nov. 19 to become inspector general of the Troubled Asset Relief Plan.

But committee Chairman Christopher Dodd announced two days later that a “hold” had been placed on Barofsky.

In one of the more arcane procedures still occasionally practiced in the tradition-bound Senate, a nominee for a federal post may be blocked by an individual lawmaker who does not need to reveal his or her identity or rationale.

Dodd, a Connecticut Democrat, called the hold on Barofsky “regrettable” when it occurred. It remains unclear which Republican lawmaker was responsible for the hold.

Republican aides said Barofsky’s nomination is now scheduled to move within days to the Senate floor for action and approval is expected.

As inspector general, Barofsky will be responsible for monitoring the effectiveness of the Treasury Department’s bailout program to help the U.S. financial services sector, the Troubled Asset Relief Program (TARP).

Earlier this week, the Government Accountability Office criticized TARP, saying the Treasury Department has not yet decided if it will impose reporting requirements on banks that borrow the money so the government can monitor how the funds are being used.

Some lawmakers have accused banks that received TARP money of hoarding it instead of lending it to businesses and consumers to ease the credit freeze.

(Reporting by Kevin Drawbaugh, editing by Matthew Lewis)