General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsTARP's Inspector General says Tim Geithner mishandled TARP funds, opposed tough bank regulations
http://business.time.com/2012/07/24/former-tarp-official-both-parties-are-captive-to-the-big-banks/?iid=biz-main-lede?xid%3Dgonewsedit&google_editors_picks=true
Former TARP Official: Both Parties are Captive to the Big Banks
By Christopher Matthews | @crobmatthews | July 24, 2012
...Enter Neil Barofsky, the former Special Investigator General for TARP, the $700 billion bailout fund launched in 2008 in order to stabilize the nations financial system and broader economy. Barofsky is out today with a new book Bailout, which he hopes will refocus the national debate towards how little has changed on Wall Street since the shenanigans of too-big-to-fail firms nearly brought down the global economy.
Bailout is an engaging account of the Washington turf wars and power plays that occurred as the Bush and Obama Administrations tried to revive the nations economy in the wake of the financial panic of 2008. Barofsky, an Obama-campaign-contributing Democrat, was plucked from a position in the U.S. Attorneys office in New York City to oversee the governments $700 billion TARP fund. But when Barofsky got to Washington, he found the Treasury Departments of both the Bush and Obama administration to be populated with those who either share Wall Streets view that the broader economy is wholly dependent on the thriving of large, multinational banks, or regulators too concerned with their own career prospects to challenge that view. And at every turn, as Barofsky tried to impose more transparency and accountability on banks receiving TARP funds, he found himself met with resistance most doggedly from Obama Administration Treasury head Timothy Geithner.
This regulatory capture is the main theme of the book. In a phone interview with TIME, Barofsky said exposing this subtle form of corruption was his main motivation for writing the book. And no official gets it worse than Geithner, who, Barofsky argues, has shown a remarkable deference to the interests of Wall Street, by protecting them at every juncture through the implementation of TARP and the regulatory reform process. Throughout the narrative, Geithner and other Treasury officials bristle at and obstruct every attempt to turn up the heat on the banks, whether through auditing their use of TARP funds to ensure that they went to increased lending, or to forcibly shrink the banks through bipartisan legislation like the ill-fated SAFE Banking Act, which would have put hard caps on the size of too-big-to-fail banks.
And though the book itself doesnt directly address President Obamas role in this resistance, Barofsky ultimately holds him accountable. He supported the President in 2008, and says that he when he first started clashing with Geithners Treasury department, he engaged in mental gymnastics to absolve Obama of responsibility, thinking that the President wasnt aware of the departments obsequiousness towards big Wall Street banks. But over time, he came to realize that the White House itself was ultimately responsible for the misdeeds of the Treasury Department. Said Barofsky:
You get to a point where as an executive you are responsible for the actions taken by your subordinates . . . and I dont think these were just mistakes. I think this was the Presidents position on the policy choices he wanted to make. And those policy choices have been unsuccessful at best, and disastrous at worst.
...
Barofsky also details how Geithner rewarded the banks with HAMP money, despite the banks' continuing abuse of the program's intended recipients: struggling homeowners:
http://www.businessinsider.com/neil-barofsky-bloomberg-column-2012-7
The Home Affordable Modification Program was supposed to help Americans struggling with their mortgages get above water again, but it's moving an incredibly slow pace. As of March 31st, 2012 the number of homeowners helped had only reached around 800,000.
A promise to withhold funds from banks that weren't helping homeowners (made in June 2011) was short lived. Wells Fargo improved, said Barofsky, but JP Morgan and Bank of America continued to underperform. Either way, everyone got their funds less than a year later as a stipulation of the $25 billion robo-signing settlement against banks.
And about that settlement Barofsky sees it as a win for the banks too. Just break down the numbers:
The rest won't actually be paid out in cash, $7 billion will be in the form of 'credits' that banks earn for things like donating homes to charity and bulldozing worthless houses.
And then there's what happens to the rest of the $10 billion (from Bloomberg):
Egalitarian Thug
(12,448 posts)banned from Kos
(4,017 posts)How was the other $695 billion "mishandled"?
Actually, we got tough on bonuses and compensation. We got tough on collecting interest for the taxpayers. There was no stipulation for lending in the original 2008 bill.
Barofsky has a weak case.
The facts show that we got tough with the banks http://en.wikipedia.org/wiki/Supervisory_Capital_Assessment_Program
ProSense
(116,464 posts)"Enter Neil Barofsky, the former Special Investigator General for TARP, the $700 billion bailout fund launched in 2008 in order to stabilize the nations financial system and broader economy."
...none of these pieces ever mention the fact that Obama reduced TARP:
The TARP program originally authorized expenditures of $700 billion. The DoddFrank Wall Street Reform and Consumer Protection Act reduced the amount authorized to $475 billion. By March 28, 2012, the Congressional Budget Office (CBO) stated that total disbursements would be $431 billion and estimated the total cost, including grants for mortgage programs that have not yet been made, would be $32 billion.[1]
http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program
Response to brentspeak (Original post)
Post removed
nadinbrzezinski
(154,021 posts)should I pretend to be?
Hydra
(14,459 posts)But it was clear from the beginning- President Obama supports Banks, Wall St. and RW Voodoo economics despite all of the evidence that they don't bring any benefit to the average person.
Being in the Big Club must be awesome- selling out most of humanity for peanuts seems to be easy for them.
Octafish
(55,745 posts)Statute of limitations and all that kick.
lonestarnot
(77,097 posts)Hell Hath No Fury
(16,327 posts)Geithner -- when that name came up I knew we had just been screwed sans lube. One of the worst appointments of the Administration -- we continue to pay the price for that choice. >