Neil Barofsky: Washington's Ties to Wall Street Caused TARP's Failure

Tuesday, July 24, 2012

Appointed by the Bush Administration as Special Inspector General in charge of the Troubled Asset Relief Program (TARP), Neil Barofsky assumed his position in the wake of the 2008 financial crisis when Americans households collectively lost $19.2 trillion.

As chronicled in his new book, "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street," Barofsky thought the Bush and Obama Administrations wanted a tough regulator, an inspector general who would aggressively oversee the hundreds of billions of dollars loaned to the banks, the institutions that helped cause the immense financial crisis.

As Barofsky tells it, he couldn't have been more wrong. "Within the culture of the Treasury Department, and in Washington in general, there is this deference, and almost a deification, of the executives at these large financial institutions," he tells The Takeaway. He explains that he thought his job was to insure that the banks didn't take advantage of the TARP program and its taxpayer dollars, but both the Obama and Bush Administrations told him not to worry about loopholes in TARP because big banks wouldn't risk their reputations just to profit off of taxpayers.


Neil Barofsky

Produced by:

Jillian Weinberger

Comments [3]

Larry Fisher from Brooklyn, N.Y.

I always thought the program should have been called Tar... after listening to this segment, it is time to start a Tar and Feather Program to fill in all the holes.

Jul. 24 2012 09:35 PM

This was the same Democrat Congress that nearly quadrupled the deficit so suggesting they wanted to be frugal doesn't pass the smell test. Does the "sense of deference" have anything to do with the Wall Street money that went to the Obama campaign in 2008 and how does Fannie and Freddie figure into this crisis along with the Community Reinvestment Act?
Government intervention helped cause this crisis so is the solution more government involvement?

Five trillion has been spent under this administration and the same people "outraged" over the banks want another four years with more spending and more government interference.
What about the five trillion dollars worth of "bad decision making" that has happened in the last four years?

Jul. 24 2012 09:28 AM
Jessie Henshaw from way uptown

Neil, You're more insightful than most on how the purposes of finance have been distorted by the concentration of money. You have only a short step or to to go to discovering that the root problem, that the design and purpose of the financial economy is to concentrate money.

We all do it when we increase our savings by %'s, and some are better at it than others, but it's the whole system for doing that we need to change. In good times people are just totally unaware they have built our society on the model that naturally becomes unmanageable.

From a physics of natural systems approach there's a very practical solution, to use nature's "S" curve plan, (because she also begins every large complex system with a period of explosive growth) and switch from naturally destabilizing growth to naturally stabilizing growth, as a global sustainability plan(¸¸.•´ ¯ ).

Jul. 24 2012 07:07 AM

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