It is well known that the Department of Government Efficiency (DOGE), led by the billionaire Elon Musk, has been clear about its objectives since its establishment. They ventured into uncharted territory that no outsider had ever set foot in before: the US Department of the Treasury’s payment system. This area had always been off-limits, causing alarm among five former Treasury Secretaries who protested that apart from a few career officials, no one else should be allowed access.
The headlines the next day were filled with panic, but the reasons behind it were unclear. Aren’t government accounts always open to scrutiny by incoming administrations during the transition period? Is this not a normal practice? The answer surprised many; the accounts were not open to any administration. They were essentially a private treasure trove for a select few ambitious individuals within the system.
In the following days, protests and objections mounted, leading to a temporary restraining order issued by federal judges. The most common concern voiced was that accessing the payment system could disrupt the long-established system, violate privacy, jeopardize data security, and undermine the systems set up by successive presidential administrations since Franklin D. Roosevelt.
Although the temporary restraining order by federal judges was partially overturned, allowing the Department of Government Efficiency to conduct reviews and audits of selected departments they had been monitoring, full access to the Treasury payment system remained restricted. Trillions of dollars have flowed out through this portal since World War II, without oversight or independent audits by elected officials or their appointees.
We need to analyze the implications and rationales of this policy in the financial sector.
Back in the 1990s and early 2000s, Bernie Madoff, a renowned stockbroker, successfully ran a mysterious hedge fund that outperformed all markets for 17 years, until the 2008 financial crisis revealed his Ponzi scheme. Despite being a prominent financial innovator and former chairman of the Securities and Exchange Commission, Madoff’s fund operated illegally for decades, inflating his reputation and network of investors who trusted him with billions of dollars.
Madoff’s fraudulent scheme began early on, using new investments to cover losses in existing accounts since the fund’s inception in the 1960s, earning him a reputation for extraordinary financial prowess. Although he was seen as a genius with a proprietary trading model superior to others on Wall Street, his success was built on a lie that eventually collapsed when losses overwhelmed profits, forcing him to resort to the Ponzi scheme as a standard operating procedure.
Over time, Madoff’s books and transaction records became increasingly secluded, accessible to fewer individuals, even denying his own sons, who were meant to inherit the financial empire, a glimpse behind the scenes despite their requests. Excuses like trade secrets, confidential client data, and company security were used to shield the operations from scrutiny, following a pattern similar to Madoff’s decades-long deceit.
The Securities and Exchange Commission (SEC) harbored suspicions but failed to pursue them due to Madoff’s impeccable reputation. Only when outside scrutiny intensified did Madoff confess his fraud, revealing a fabricated facade that concealed billions in losses. This cautionary tale emphasizes the importance of transparency, a principle upheld by public audits that every publicly traded company undergoes routinely.
The founding fathers of the United States understood this, as reflected in the Constitution’s demand for regular financial disclosures from the government. While many government agencies undergo public audits and report spending budgets and revenues, transparency still fell short. The recent revelations by the Department of Government Efficiency have exposed the lack of access to the Treasury payment gateway for nearly 80 years, raising questions about the government’s financial practices.
As federal judges seek to halt this opacity, the public wonders: what is being hidden, and why? The best way to dispel suspicions is through transparency. The federal government, often not a paragon of fiscal prudence, must adhere to professional standards by fully disclosing its accounts if led by the new administration under President Trump, it could be a transformative moment, ushering in a new era of accountability and historic change.