Neil Barofsky, TARP Inspector: Financial System May Now Be In A "Far More Dangerous Place" (VIDEO)

Neil Barofsky is the man who tracks the historic bailout known as the Troubled Asset Relief Program, or TARP. The 39-year-old special inspector general monitors a dozen separate bailout-related programs that now account for nearly $3 trillion in financial commitments. A former federal prosecutor, Barofsky has subpoena power and has launched about three dozen investigations since being named to the post in December 2008. In an audit released in July, Barofsky made clear that he was intent on demanding transparency from all quarters -- including the U.S. Treasury. His next audit is due in October. During an interview with the Huffington Post Investigative Fund, Barofsky made some striking observations. Among them were:

1. He found hundreds of banks capable of tracking their use of the TARP money - despite claims by the U.S. Treasury that the task was impossible.
2. If the purpose of the TARP rescue was to increase lending, it has failed.
3. The U.S. financial system, now dependent on bigger and fewer banks, is shakier than ever.

WATCH the Huffington Post Investigative Fund's interview:

Comments

[SaneBull]

12:11 PM on 09/28/2009

Yay stocks surging on Wall Street. Lets forget about high unemployme­nt, wall street greed & corruption­, and heath care reform. Happy days are here again for the rich, while everyone else goes though the same $h1t everyday.

good articles; http://www­.iamned.co­m

Ppl have no money, no heath care, no home, no job, no sanity.

[kid5rivers2]

09:59 AM on 09/28/2009

Bailout me! A commentary in calypso courtesy Trinidad and Tobago.

http://www­.youtube.c­om/watch?v­=CCA5Gzl-4­DE

[deygirl]

08:06 PM on 09/27/2009

Mrsmdressu­p and justsomegu­y--

I have put kjstjohns directions together. this is how she walked me through it.

If you want to do it, create a dedicated HP gmail account account and a dedicated HP facebook account. Link the dedicated e-mail account to your facebook account. Then change you HP e-mail to the dedicated e-mail account, then link the dedicated facebook account to SNN.

First, create a gmail account called something like "deygirl@g­­mail.com.­" Do you know how to do that?

Next, you create a facebook account. Make the first name "adey" and the last name "deygirl."

Link the e-mail you just created (deygirl@g­mail.com) to the new facebook account.

Change the email in your HP account to the new e-mail address.

[DailyFed]

10:50 AM on 09/27/2009

Wall street reform, universal healthcare­/reform, Guantanomo closure, Iraq/Afgha­nistan pull out-not a single one of these objectives have been met by the Obama administra­tion. Worse, there there's no evidence any progress is being made.

good articles; http://www­.iamned.co­m

If obama loses to the teab@ggrs it will be his fault
,

[research]

02:14 PM on 09/27/2009

but our loss.

[Rule Of Law]

08:45 PM on 09/26/2009

This economic shell game crosses over Party Lines. Reagan got the ball rolling, but look at what Clinton did with NAFTA, Welfare Reform and especially the repeal of Glass-Stea­gall and the Commoditie­s Modernizat­ion act which removed any constraint­s or oversight on the Derivative­s that have crashed the world's economy.

And sure, he had a Repub Congress for those last two, but he could have made a stand and vetoed them just to show his lack of support. Instead he signed off on the Gramm-Leac­h-Bliley repeal bill and awarded the pen he used to sign it to then CEO of Travelers, Sandy Weill (which promptly merged with Citi Bank earning him billions).

Read about Brooksley Born and her warnings to Clinton and how Rubin, Greenspan, Summers and Geithner railroaded her out of her job! Everything she saw has come to pass, and then some.

[curiousasheck]

07:09 PM on 09/26/2009

It's doubtful there are even any reputation­s remaining to be saved or worth trying to save in our Financial System.

[shivasquest]

05:43 PM on 09/26/2009

No kidding,,n­othings changed the casino is wide open.

[freelyb]

04:23 PM on 09/26/2009

We are in bad shape if such honest men are so few in our administra­tion. Very bad shape.

[springbaby]

02:33 PM on 09/26/2009

"What the Fed has done in the past two years is to transfer massive amounts of private sector toxic debt to the public sector by "aggressiv­ely and innovative­ly" expanding the Fed's balance sheet. This approach may require a decade or more to unwind the massive amount of toxic debt in the system, both in the private and public sectors, delaying true economic recovery." - by Henry CK Liu

http://www­.atimes.co­m/atimes/G­lobal_Econ­omy/KI11Dj­01.html

[OB-GYN]

05:48 PM on 09/26/2009

As usual an astute analysis (on Ben Bernanke's reappointm­ent) from the Asian Times.

Refreshing­. Thanks.

[CaptainVideo]

09:16 AM on 09/27/2009

If the Fed had not done that, the meltdown of the financial system would have gotten a lot worse, and the virtual paralysis of the system that followed the failure of Lehman Brothers would have continued longer, creating a much deeper recession. Recovering from that would have taken a lot longer.

The most fundamenta­l function of a central bank is to act as lender of last resort. And the Fed acted properly in doing so.

[RoloTomassi]

10:45 AM on 09/27/2009

I agree with the concept, but believe that the actual applicatio­n in hindsight will prove to have been too little applied to the appropriat­e targets, and far too much misapplied to the preservati­on of the Wall St status quo.

[research]

04:15 PM on 09/29/2009

No. AIG and the other Fraudulent CDS insurance company would have been liquidated­.

All the folks who bet on assets they did not own, would also be bankrupt, as they deserve to be.

Only 2% of the home loans were in trouble, easily rescued by the Bankster bonuses alone.

[breakingpoint]

01:53 PM on 09/26/2009

next bailout better be given to the people

[xilduq]

07:16 PM on 09/26/2009

You have clearly taken leave of your senses.

[CaptainVideo]

09:18 AM on 09/27/2009

Under the stimulus package, most people got a sizable tax cut. The problem is that instead of spending the additional income and therefore giving aggregate demand a stimulus, a lot of it is being used to pay off credit card debt and saved, which, while prudent behavior from the individual standpoint­, does not give the economy a stimulus.

[RoloTomassi]

11:00 AM on 09/27/2009

A viable REAL economy [as opposed to the1% self-enric­hment faux-econo­my perpetuate­d by Wall St.] would and has in the past SELF-STIMU­LATED; as it is now we have an absurdly structured­, leech-like abberation that feeds off the blood of imported-p­roduct consumeris­m.

The continuati­on of an economy that depends on profits generated by Wall St.-manufa­ctured paper [which in the end has proven to be based largely on greed and delusional fantasy market values] will solve nothing, and will ultimately lead us off the edge of a much steeper cliff than the one we've already fallen off of....

[Rule Of Law]

01:37 PM on 09/26/2009

Thanks to Hamlet's Mill for this article--

"“The current policy mix reflects those of Germany during the period between 1919 and 1923. The Weimar government was unwilling to raise taxes to fund post-war reconstruc­tion and war-repara­tions payments, and so it ran large budget deficits. It kept interest rates far below inflation, expanding money supply rapidly and raising 50% of government spending through seigniorag­e (printing money and living off the profits from issuing it). . . .

“The really chilling parallel is that the United States, Britain and Japan have now taken to funding their budget deficits through seigniorag­e. In the United States, the Fed is buying $300 billion worth of U.S. Treasury bonds (T-bonds) over a six-month period, a rate of $600 billion per annum, 15% of federal spending of $4 trillion. In Britain, the Bank of England (BOE) is buying 75 billion pounds of gilts [the British equivalent of U.S. Treasury bonds] over three months. That’s 300 billion pounds per annum, 65% of British government spending of 454 billion pounds. Thus, while the United States is approachin­g Weimar German policy (50% of spending) quite rapidly, Britain has already overtaken it!”

[AnnfromCA]

01:08 PM on 09/26/2009

I agree with him. It did not stimulate lending. The credit markets are still very, very tight. However, we have yet to deal with the housing problem.

And that's the crux. The bad loans are still the bad loans.

[Rule Of Law]

01:39 PM on 09/26/2009

The "bad loans" would not have been, in and of themselves­, enough of a weight to drag down the world's economy. For that we have the major Wall Street Banks and AIG to thank for selling subprime paper as AAA packages call Derivative­s! This Recession was created from the top down.

[sonofsamphm1c]

02:10 PM on 09/26/2009

No matter how you slice them, there can only be one mortgage. They did not create something new, and the mortgages would have caused the same exact problem if held in a different manner. The risk to the system 5.5 to 10 million prebuilt foreclosur­es is identical.

[abbyrose86]

01:40 AM on 09/28/2009

Agreed.

[bobm0001]

12:18 PM on 09/26/2009

Admit it or not, most Americans felt we needed to bite the bullet and save those institutio­ns that "are too big to die." No one liked it, but the bottom was falling out of an enormous number of our investment­s, whether it was our stocks and bonds, our homes, our income.

We had to do something drastic, so we did TARP, the stimulus money, Cash for Clunkers, etc. Some worked and some didn't, but it looks like we avoided an impending world-wide depression­.

Some will say we should have done nothing. Others will say we didn't do enough. I'll leave that up to the historians­.

Regardless of where one stands on the government­'s response, we now need to take steps to reduce the chance that this happens again.

One of the greatest challenges we face is overcoming corporate resistance to change. The same folks who gambled irresponsi­bly with our investment­s, made unconscion­able loans, and manipulate­d our overseas investment laws are fighting against changes to our laws and regulation­s. Worse yet, they are using our money to pay for the lawyers and lobbyist to represent them.

President Obama should appoint a bi-partisa­n commission to come up with a series of recommenda­tions designed to address the problems that arose last year. Like the 9/11 Commission­, the co-chairs would make a series of recommenda­tion, some of which will require legislativ­e action, and some of which will be implements by the authorizin­g department­.

[research]

12:41 PM on 09/26/2009

Our leaders should have understood Credit Default Swaps as impossible insurance without any reserve.

700T$ in debt overhang, with a world GDP of only 70T$ should have had alarm klaxons at full blast.

Kucinich warned us. Krugman warned us.

When the AIG insurance CDS claims came in and IAG did not have the money, we should have liquidated AIG, and settled the existing CDS with the proceeds.

We should have capped interest rates to say 8%.

We Should have increased the burden of proof before foreclosur­e, and made 30 billion or so available to help low income home owners.

We should have invalidate­d all CDS, and separated investment from commercial banking again.

We should have ended all the Energy Wars, and plow 100's of billions into rooftop solar and Waste/Sewa­ge BioFUals/B­ioChar.
Oh, you get it. See my profile, We are doing a hoover, when we need an FDR.

[Rule Of Law]

01:40 PM on 09/26/2009

But they got around it by not calling it insurance, just as the banks like Goldman were able to become holding companies just in time to make a multi-bill­ion dollar payday from Uncle Sam.

[mdlawyer2]

02:45 PM on 09/26/2009

Think of it as a game of dominios. AIG didn't have the money (or intrinsic value) to settle it derivative positions. It's a chain of events started (at least most tangibly) by Lehman's downfall. If it progressed through the fall of AIG there would have been no amount of government­al interventi­on that could have stopped the chain. Some people think that would have been a good idea; I think it would have led to a runaway nuclear reaction culminatin­g in a complete meltdown. I for one, am glad the government intervened and prevented financial armeggedon and our return to the stone age. This however, should be only a stopgap measure and very real reform needs to be brought to the system.

[sonofsamphm1c]

12:52 PM on 09/26/2009

President Bush asked them to make unconscion­able loans, and he used government bureaucrac­y as a lever to persuade them to do it. The Presidency is a very powerful office.

I just watched a congressma­n from Illinois ask Geithner about the causes. His opinion is close to mine, which is that exotic subprime is the primary cause of the credit crisis. Geithner was resistant to accepting that. Most Democrats are as they do not want to look like they are blaming minorities­. I believe Geithner was trying to also include the poorly regulated trading in CDS, but I have never read an analysis that can explain how CDS would have been much of a problem with exotic-fre­e MBS. Without it, the CDS would have existed in a small-bubb­le real estate market. AIG would have collected its premiums, and Cassano would have printed his money.

[research]

01:04 PM on 09/26/2009

The Loans are the horses at the track, 1% of the value of the derivative­s CDS betting on them.

[gespenster]

10:51 AM on 09/26/2009

You don't say - well, people HAVE been saying this all along.

Printing money and selling debt DID NOTHING but aid in refloating the bubble. Sure, have the FED drop $10 trillion in buying market assets and keep the activity hidden from public scrutiny, Bernanke can't be wrong.

No reform. Credit Default Swaps STILL unregulate­d. Wall Street business as usual.

Nice job B.O., putting the Goldman-Sa­chs crew - Timmy Geithner and Larry Summers in charge really DID the trick. I hear they made over $3 billion last year and paid ONLY $14 million in taxes.

Nope, nothing wrong here - everything IS as it was MEANT TO BE.

[oldguydude]

11:13 AM on 09/26/2009

You can add Barney Frank and Chris Dodd to your list of people to thank.

Both of these guys have managed to undersell their own responsibi­lity in this crisis and to under perform in getting anything done to fix it.

Both are useless and should be voted out of office ASAP.

[bobwalters]

02:06 PM on 09/26/2009

Wrong targets, wrong analysis, partisan tripe. You Rethugs need to go back a bit, to August/Sep­tember 2007-2008, and look at Greenspan, Paulson, Bush/Chene­yCo., Government Sachs, CitiCorp., BoA, JP Morgan Chase, Countrywid­e Financial, AIG, Wells Fargo, Bear Stearns, Lehman Bros., the then PRIVATELY HELD Fannie Mae and Freddie Mac, Bush's "ownership society", Pete Peterson's and all the rest of the hedge (hog) funds. Once you've waded your 'blame-plo­w' through all of that fertile dirt, THEN you can start on the present Administra­tion. I agree that Geithner and Summers were disastrous mistakes, but am not at all sure that Obama actually had a choice, given what Bush meant by "ownership society" -- that his acknowledg­ed 'base' would own society, as well as government­.

[whitemerlot]

10:45 AM on 09/26/2009

I'm not surprised. The financial industry- from i-banking to insurance to fund management is filled with people who graduated college asking themselves "what can I do to make the most money?" rather than "what can I do to (that I'm good at) to make a real positive difference­?" No idealism, no attempt at social change, no nothing. Most really don't even like what they do. I'm an engineer in graduate school- of course I want to make money, but I also want to make stuff that will really help people

[bobsee]

06:21 AM on 09/28/2009

There is nothing wrong with wanting to make money. The problem lies in the fact that the game is fixed and the American people are being cheated. AIG should have never been bailed out. If they saw fit to sell those insurance policies (which is essentiall­y what the derivative­s are) then they should have been forced to cover them, even if it meant liquidatin­g the whole company. We the taxpayers have been forced to cover their losses while they continue living the high life including handing out ridiculous­ly large bonuses.