By Richard Teitelbaum

Neil Barofsky was unpacking boxes in December 2008 when the stench of sewage wafted through the hallways at the 168-year-old Main Treasury Building. The space assigned to him as head of the Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, was shoehorned into the basement, three floors below U.S. Treasury Secretary Henry Paulson ’s offices.

“They eventually discovered a broken sewer main beneath the floor,” says Barofsky, 40, adding that he doesn’t think any slight was intended by relegating him to the malodorous quarters. Still, he says with a smile, “I wasn’t given the prime real estate in Treasury.”

The incident was noted by Beltway insiders, Bloomberg Markets magazine reports in its June issue. “It became an apt metaphor for the foul relations between Treasury and SIGTARP,” says Michael Smallberg, an investigator at the Project on Government Oversight , a Washington watchdog group. That tense relationship has grown out of Barofsky’s mandate to monitor and root out fraud and waste in the management of TARP , the $700 billion program passed in October 2008 to remove toxic debt from the banks. The special inspector general, in a series of reports, interviews and congressional hearings, has heaped criticism on the Treasury Department’s operation of the program.

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