Neil Barofsky’s book BAILOUT An Inside Account of How Washington Abandoned Main Street while rescuing Wall Street, leaves no doubt that in his mind the American taxpayers have struck out and the big banks continue their winning streak. He also casts a large vote of no-confidence in Treasury Secretary Tim Geithner.
From December 2008 until March of 2011 Barofsky served as the Special Inspector General in charge of the oversight of TARP ( SIG-TRAP). The primary purpose of SIG-TARP, created by an act of Congress, was to monitor the flow of TARP funds to prevent fraud and misuse of the appropriations. Barofsky, appointed by President Bush was later re-appointed by President Obama. His three years of overseeing and reporting to Congress on the administration of TARP played out in an almost daily adversarial relationship with Treasury Secretary Geithner.
In a book, the first chapter of which is titled Fraud 101! , Barofsky’s conclusions come as no surprise to the reader. In a prescient view on the day that he accepted the assignment he writes, ” I had no idea what I was in for and what I’d learn. I hadn’t yet understood the degree to which the entire crisis was unleashed by the greed of a small handful of executives who exploited a financial system that guaranteed that no matter what risks they took, they’d be able to keep the profits and lavish pay those risks generated with the assurance that if their outsized bets went wrong, the U.S. taxpayer would cover their loses. ”
BAILOUT is well written, to the point and Barofsky successfully reduces complex issues in layman’s terms. The book is also a lesson in how Washington insiders operate and why the system is broken. It is a disturbing read, not only because of enlightenment about what went wrong with TARP, but moreover, Barofsky makes a case that nothing has changed and that the banking system is heading back down the same disastrous road. It is important to remember that the author resigned from his position and was not fired, which adds objectivity to the writing
Barofsky holds out little hope that the watered down Dodd- Frank legislation will make a difference. “As recent history has repeatedly shown, through massive campaign contributions, relentless lobbying, and multi-million dollar payouts awaiting government officials who join Wall Street firms, no legislation can confer the necessary fortitude upon the regulators. ”
Not an optimistic outlook for the nation’s ability to deal with financial institutions that are “Too Big To Fail,” particularly when some used TARP money to purchase additional banks!
BAILOUT is an important read, particularly during this election cycle. Ironically TARP is not a campaign issue but Barofsky leaves little doubt that ” To Big To Fail” remains a looming disaster for the U.S. economy and American taxpayers.
Another important book on this general subject is Reckless Endangerment by Gretchen Morgenson and Joshua Rosner. See gordonsgoodreads October 19, 2011.