Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street
Neil Barofsky, Former Special Inspector General in Charge of Oversight for TARP
Free Press, July 24, 2012
Hardcover: 288 pages
In this fascinating account of his trial-by-fire in Washington’s wicked ways, Neil Barofsky surfaces with a searing indictment as an insider of both the Bush and Obama administrations, dealing with the ongoing mishandling of the $700 billion TARP bailout fund. With behind-the-scenes experience, he repeatedly reveals proof of the deep degree to which our government officials sank to serve the interests of Wall Street firms at the expense of the 99%—and at the larger expense of real financial reform.
Recruited during the depths of the financial crisis in 2008, Barofsky shed his job as a prosecutor in the elite U.S. Attorney’s Office in New York City, where he convicted drug kingpins as well as Wall Street execs and perpetrators of mortgage fraud, to take on the job of the special inspector general in charge of oversight of the spending of the bailout money. From day one, his efforts to protect against fraud and to hold the big banks to account for how they spent taxpayer dollars were met with outright hostility from Treasury officials, top down, in charge of the bailouts.
Barofsky tells how, in aiding the interests of the bank, Treasury Secretary timothy Geithner and his sidekicks, worked with Wall Street banksters to design programs that would funnel huge amounts of taxpayer dollars to their firms and would have allowed them to game the markets and make huge profits with practically no risk or accountability, while repeatedly fighting off Barofsky’s attempts to put crucial fraud protections in place.
His ongoing investigations also revealed abject mismanagement of insurance giant AIG’s bailout as Geithner‘s choice to permit payment of millions of dollars in bonuses, including, if you can believe it, a $7,700 bonus to a kitchen worker and $7,000 tip to a mailroom assistant. In the wake of the bonus handouts, the Obama administration’s “TARP Czar” lobbied for the bigwigs to retain their big pay.
Then, too, during the auto bailout Barofsky fought for the rights of more than two thousand auto dealerships. Treasury’s auto bailout team sought to void the contractual rights granted them under state franchise laws to shut them down immediately, which was a perceived but misconceived perk for the industry.
While serving up the stark details about how this giveaway was going on, Barofsky realized how the interests of homeowners and broader public were betrayed. Barofsky tells how Geithner and his team constantly failed to fix obvious flaws in the Obama administration’s homeowner relief program, which were pointed out by Barofsky and other bailout watchdogs, Geithner and sidekicks’ rejection of anti-fraud measures, unleashed a wave of abuses by mortgage providers against homeowners, actually causing some who would not have lost their home otherwise to go into foreclosure. In the end, only a small fraction (just $1.4 billion at the time Barofsky stepped down) of the $50 billion slotted to help homeowners was spent, while the funds expended to prop up the financial system—as Barofsky exposes—totaled a mind-boggling $4.7 trillion.
As Barofsky sounded the alarm about bailout failures, he met with obstruction of his investigations, and he tells in blow-by-blow detail how an all-out war was waged against his efforts, with even the White House launching a broadside against him. Bailout is a fascinating account of Neal Barofsky’s plunge into the political meat grinder of Washington, as well as a real revelation of just how captured by Wall Street our political system is and why the too-big-to-fail banks have only become bigger and more dangerous in the wake of the crisis, which could happen again.
After his stint from December 2008 to March 2011 as investigator general of the Troubled Asset Relief Program (TARP), Barofsky resigned to be a senior fellow at New York University School of Law, hopefully to teach a new generation of lawyers to do the right thing relentlessly. Before that, he was a federal prosecutor in the prestigious United States Attorney’s Office for the Southern District of New York for more than eight years. During this time he headed the Mortgage Fraud Group, while also prosecuting some of the biggest cases in the United States, including the conviction of the former CEO and president of Refco, a New York financial services company and commodities and futures brokerage which collapsed from its malfeasance.
Barofsky, a man for all banksters to fear, also led the investigation that resulted in the indictment if the top fifty leaders of the Revolutionary Armed Forces of Colombia (FARC) on narcotics charges—a case described then by U.S. attorney general as the biggest narcotics indictment filed in U.S. history.
This is Barofsky’s first book and hopefully not his last. If he could be cloned, the financial system could use dozens of Barofsky’s, whose commitment has always been to tell the truth about what’s wrong, rather than hide it in any way for personal gain. With a Barofsky Battalion, we could put this country on its financial feet again, though we might not see some of our most popular Wall Street faces for quite a while. And wouldn’t that be wonderful?
Jerry Mazza is a freelance writer, life-long resident of New York City. An EBook version of his book of poems “State Of Shock,” on 9/11 and its after effects is now available at Amazon.com and Barnesandnoble.com. He has also written hundreds of articles on politics and government as Associate Editor of Intrepid Report (formerly Online Journal). Reach him at firstname.lastname@example.org.