Senator Sherrod Brown

WASHINGTON, D.C.—United States Senator Sherrod Brown (D-OH) today attended a Senate Banking Committee hearing on the nomination of Neil Barofsky to be the Inspector General of the rescue effort under the Emergency Economic Stabilization Act.

A copy of Brown’s remarks, as prepared for delivery, follows.

Mr. Chairman, thank you for calling this morning’s hearing to consider the nomination of Mr. Barofsky to be Inspector General of the rescue effort under the Emergency Economic Stabilization Act.  And thanks to Mr. Barofsky for being willing to take on this enormous task.

There is little precedent in our nation’s history for this undertaking.  In the space of about a month, the Treasury Department has committed close to $300 billion, something like $10 billion every single day of the week.  And the Federal Reserve, which is not subject to the oversight of this position, has committed a reported $2 trillion to stabilization efforts.

Probably the closest thing we have in scale to this effort was the mobilization for World War II, when our country went deep into debt to become the arsenal of democracy.  The threat then was military, not economic.  The government engaged in massive spending in a short period of time to counter a grave danger to our nation and the world.

Even as Hitler threatened the free world, Senator Harry Truman and his committee found that some of their fellow citizens were eager to put their pocketbooks ahead of their patriotism.

So while I am hopeful that every single dollar of the $700 billion will be well spent, I think it is vital that we have vigorous oversight of the actions of the government and the private sector.

Congress took an enormous leap of faith in providing the authority to the executive branch under the EESA.  We will know before long whether this leap of faith was justified.

Right now, that faith is being tested.  

$300 billion has been committed to banks, but it is not clear whether banks are committed to the purposes of this statute.  This money was authorized to address the credit crunch, not fund bank mergers.

The housing market, which is the root cause of our economic crisis, is being ignored.  Despite ample authority in EESA’s section 109, the administration has refused to invest even a small portion of the rescue funds in the kind of wholesale loan modifications necessary to address the housing crisis.

The auto industry is in dire straits, but it seems it will get no help from this administration.

And the transparency and accountability that the administration committed to provide to Congress and the public have been spotty at best.

Almost four weeks ago, National City Bank, one of the largest banks in the country, was forced by the administration into a fire sale to PNC Bank.  For more than 160 years, National City has been an important asset to Ohio.  By the end of this year, it will likely be an asset of PNC.

That sale is being financed by the taxpayers, but the taxpayers are being stiffed when it comes to getting answers.

Three weeks ago, I asked Treasury to respond to questions about the proposed transaction.  I’m still waiting.  And I believe, Mr. Chairman, this committee is also waiting for answers to the questions that arose out of the committee’s hearing on October 23.

I think that is unacceptable.  And I hope our nominee will commit to doing a far better job than the administration has to date.