Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), speaks during a hearing of the Senate Finance Committee on Capitol Hill July 21, 2010 in Washington, DC.
Spoke to Neil Barofsky, author, "Bailout," which covers Neil Barofsky's time as Special Inspector General for TARP from December 2008 under Hank Paulson and George Bush to March 2011 under Tim Geithner and Barack Obama. The illustrations and revelations in the chronology of TARP to TALF to HEMP to PPIC are eye-popping; and the summary that the banks too big to fail are ruthless and unethical is a predicate for a conclusion that Dodd Frank is a failure at reform. Along the way, Neil Barofsky makes the case, from the point of view of a law enforcement official with power to audit, to investigate and to send over the bad and the stupid and the nakedly dangerous, that the Obama administration broke the faith of contracts in its rush to solve the crisis. The White House, Treasury and Congress were all matter of fact in breaking the contracts between GM, Chrysler and the dealerships (such as the OH dealer in the above video), but they were all adamant on the sanctity of the contracts between AIG and its counterparty traders such as the banks too big to fail. Treasury under TARP favored the crony banks in all instances. It was worse. The TALF window at the Fed made $200 billion available to the banks in a securitization maneuver that trusted the same ratings agencies that had participated in the negligence of the CDOs at the banks too big to fail. It was worse. The TARP money flowed into the hands of more than 700 banks that were under no obligation to do more with the money than feather their nests or acquire smaller banks. I puzzle now if a contributing factor to the sluggishness of the economy since 2009 is the widespread opinion that the game is rigged for the bankers on Wall Street, that contracts cannot protect Main Street from the Federal claw, that the Obama administration has not solved the crisis, it has made the next leg down worse. The banks too big to fail in 2008 are much bigger. JPMorgan is 36% bigger; Wells Fargo is 50% bigger; Citi is 30% bigger. The Obama administration has not only mishandled the bailouts, but also it has been captured by the banks it bailed out without doubts.