Neil Barofsky, the former Special Inspector General for TARP oversight, has a new book out this week, and having only found time to read about a third of it so far, it has already earned my wholehearted endorsement. Again and again, Barofsky describes the full range of corruption and inefficiency that keeps Washington D.C. broken and unaccountable, and concludes:
“Treasury’s dismissal of our warnings [about TARP] has produced a valuable byproduct, the widespread anger that may contain the only hope for meaningful reform of our system. I now realize that the American people should lose faith in their government. They should deplore the captured politicians and regulators who took their taxpayer dollars and distributed them to the banks without insisting that they be accountable for how the bailout money was spent. They should be revolted by a financial system that rewards failure and protects the fortunes of those who drove the system to the point of collapse and will undoubtedly do so again. They should be enraged by the broken promises to Main Street and the unending protection of Wall Street. Because only with this appropriate and justified rage can we sow the seeds for the types of reform that will one day break our system free from the corrupting grasp of the megabanks.”
Not only was this guy the top official TARP watchdog, he is calling out his fellow Democrats. Oh, and the best is still to come…
Barofsky explains every maddening scandal of the TARP era in his book, and mentions JP Morgan’s recent $2b loss on proprietary trade-as-hedging as another argument for creating a line between investment and commercial banking. But the most recent banking scandal, the LIBOR-fixing outrage, happened so recently Barofsky wasn’t able to mention it in his book. But in a recent interview with The Daily Ticker, Barofsky says it’s yet another example of what happens when Wall Street loyalists like Timothy Geithner are running the Treasury Department… and not behind bars.
The [Bailout's] message to the banks was “if we commit fraud, we break the rules, don’t worry, we’re too big — they’ll never bring the appropriate steps against us,” Barofsky says in an interview with The Daily Ticker. “And that is why we’ve had scandal after scandal after scandal.”
[The LIBOR scandal] was a “global conspiracy to fix one of the most important interest rates in the world,” Barofsky continues. “[Geithner] heard this information and looked the other way. Geithner and other regulators should be held accountable, they should be fired across the board. If they knew about an ongoing fraud, and they didn’t do anything about it, they don’t deserve to have their jobs. I hope we see people in handcuffs.” (emphasis added)
Indeed, sir. My thoughts exactly.