White House Waves Off Dire Analysis From TARP Special Inspector General

Press Secretary Robert Gibbs on Thursday said the White House does not share the view that the nation's banking system is in a worse position that it was a year ago -- a dire assessment voiced a day earlier by the man in charge of monitoring the administration's bank bailout program.

The banking system is now "in a different position," Gibbs said, adding: "I don't doubt that we have steps that needs to be taken and I don't doubt that without new rules for the road there is the potential to go back to what we had and forget what we went through in the financial system."

Neil Barofsky, the special inspector general managing the Troubled Asset Relief Program, warned Wednesday that the government's bailout of the banks had actually put the system in worse position, because the Obama White House and Democratic-led Congress had done nothing to tackle the issue of banks becoming "too-big-to-fail,"

"These banks that were too big to fail are now bigger," Barofsky told CNN. "Government has sponsored and supported several mergers that made them larger and that guarantee, that implicit guarantee of moral hazard, the idea that the government is not going to let these banks fail, which was implicit a year ago, is now explicit, we've said it. So if anything, not only have there not been any meaningful regulatory reform to make it less likely, in a lot of ways, the government has made such problems more likely.

"Potentially we could be in more danger now than we were a year ago," he added.

"I don't agree," said Gibbs on Thursday. And he stressed that the White House is committed to getting the issue of too-big-to-fail under control as part of a broader approach to regulatory reform.

"I think part of regulatory reform is addressing this notion of too big to fail by giving the authority that doesn't currently exist -- as it does in place like the FDIC --to break up bigger entities and close down parts of them and deal with the problems that exist. We have certainly sought that in regulatory reform to address this concept of too big to fail and again we want to make progress on those issues."

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Comments

[structurequity]

05:31 PM on 10/23/2009

"to big to fail" for them could spell "to small to survive" for the rest of us. short sighted, top down vision does not create a viable reality for the 99% who are feeling it and feeling it hard. The future is now and it looks barren for us in the trenches, especially with voices from on high shouting us down.

[middleoftheroad]

05:20 PM on 10/23/2009

where is the money then and where is the stimulus?

[ljc]

02:51 PM on 10/23/2009

It is very disappointing that stories about the Financial System, Wall Stree and Treasury get so few comments..... All the same people are still running things. Sometimes I think Goldman Sachs rules the World....

I would love to hear some feedback on this documentary..It just came out 2 days ago. 14-10 min segments. The Fall of The Republic

http://www.youtube.com/watch?v=_m-WX3xDQJA

Frontline- The Warning was on Tuesday night.

http://www.pbs.org/wgbh/pages/frontline/warning/view/

[cosmic]

02:42 PM on 10/23/2009

Huff Post occasionally hands a bone to the slathering rabid wingers on this site. In this case it's a phony, trumped up internal message war which actually doesn't exist. There are two sides to this, and both reflect well on the Administration. First the Tarp manager says: we still need to reform, because otherwise the banks will fail. Then Gibbs says: we still need to reform, but the banks are not going to fail.

So the admin wants to keep confidence in the banks up, but still plans massive reform. Slight message conflict, but a consistent philosophy. Nothing to see here, cue the looneys!

[jefke]

09:20 AM on 10/24/2009

I am constantly amazed how the Obamaphiliacs keep drinking the koolaid. What is it going to take for you to see the that you've been had by a very slick politician? Why aren't you furious that you put all your faith in this man and he ripped you off? The man is the prisoner of Wall Street, the Establishment, and his ego.
BTW, I'm not a Republican nor a right-winger; just because one criticizes the WH does NOT mean one is a loony.

[heiko]

06:39 PM on 10/24/2009

jefke, I'm hoping that Obama is smarter than we all think, that slowly but surely He's walking his agenda through. We're all aware that change in Washington will take a long time. How much change is yet to be determined.

[bubburubb]

04:38 AM on 10/25/2009

I agree with Jefke, I'm also very liberal but am extremely disappointed in the White House's actions! If I saw a true effort to reform the finanacial system I would be over the moon and praise Obama up an down. Unfortunately, the exact opposite is happening. It is becoming very clear that we chose to not reform the banking system when we had our chance. This is not "loonies" saying this, a lot of very credible people are saying this. Do some searching on the banking reform and try to find some objective sources.
We all put our hopes in Obama, including me. Unfortunately his actions have spoken much louder than his words. Until his actions show they serve the people rather than Wall Street and corporate interests I will be disappointed.
Guaranteeing patents to drug companies for 12 years instead of the current 5 is a huge deal. Not properly regulating derivitives or Wall Street is a huge deal. Not having a strong public option is a huge deal, the "trigger" is a joke! Go down the list. Show me something that is done for the good of the people rather than for corporate interests?

[BocaMom]

01:54 PM on 10/23/2009

Is it me or is the Obama administration starting to sound like the Bush administration?

[ljc]

02:54 PM on 10/23/2009

It really does not matter who is in the WH when is comes to Wall Street and World Bankers.

[Liberal2]

12:40 PM on 10/23/2009

Hmmmmm, sounds like Bush is still president.

The nation continues to sink and Obusha orders, "Play the music "Nearer, My God, To Thee" louder!"

In case you miss the point, that was, according to most reports, what the musicans were playing as the Titainic slipped under the waters of the North Atlantic.

[MarsAmbassador]

01:18 PM on 10/23/2009

I agree. This man is going to be ignored until it's too late, then everyone will wring their hands and says, "Nobody could have seen it coming, we did everything we could." He is our financial Jeremiah and these banks are Babylon.

[cosmic]

02:31 PM on 10/23/2009

nonsense. most of the mergers that made too big to fail bigger were completed under Bush. Now the Obama admin has the responsibility to keep confidence high while they attempt to legally dismantle the banks and re-institute regulation and sensible control. All this why trolls on both sides declare Obama a liar and Bush 2. These trolls are steeped in the hypocrisy and cynicism that is the direct result of a period of massive excess in America. They can see no further than the ends of their massively bloated noses.

Imagine what the same idiotic trolls hording this article would say had Obama ordered nationalization of the banks, and subsequently had broken them up into little bits. Outrage. To everyone who would prefer to see another manufactured crisis, instead of a slow, considered reworking of our financial system, I ask you to consider how the last financial crises furthered their aims of a fair banking system.

The crisis in the financial system was decades in the making, and it will take years to undo the cultural and systematic ills that caused it. Believe that the Obama administration is doing everything it can to accomplish reform, while preventing further sudden catastrophe that reckless opportunists exploit for personal gain.

[ljc]

03:00 PM on 10/23/2009

I hope you are right . It makes me nervous that so many of the same people that caused this problem are still hanging around treasury. Please look at the links I posted above. I would be interested in your take on them..

Thanks.

[batmancw]

10:07 AM on 10/23/2009

The WH doesn't share the same view of reality that most Americans are living. They tell us "the recession is over", while the banks and Wall Street party with taxpayer money and continue with the same risky trading practices that helped bring our economy down. They tell us "we can provide healthcare for all and keep it deficit neutral". Meanwhile, they ignore the fact that NO government medical program has EVER come in at or under budget, and history suggests the cost will actually be anywhere from 2-10x the government estimate. They told us "our administration will be transparent". Yeah, don't hold your breath waiting for that to happen. They told us "we're passing legislation to protect consumers from those nasty Credit Card folks" Meanwhile, the CC companies continue to jack up interest rates and close down credit lines on customers who've never missed a payment, before the legislation takes effect. They told us that the stimulus bill would fund "shovel ready jobs". Meanwhile unemployment remains between 10-20% depending upon the state ant which combination of figures are used, and I see more businesses close their doors very day. I could continue, but let me just close by saying; WAKE UP AMERICA!!! the names have changed, but the game remains the same in Washington.

[cosmic]

02:39 PM on 10/23/2009

actually, the White House consistently reiterates its support for massive reform, and regularly reports on the financial realities of most Americans, which you would know if you paid attention to the source, instead of the corporate owned Right Wing noise machine.

The White House hasn't declared the recession over, economic indicators have. This is math, not policy. The White House says: "while the economic picture is improving, Americans aren't feeling it yet, and we won't stop working until they do". So get your reporting straight.

Naturally you segway into a whole brood of lies about healthcare reform which don't even deserve debunking. Your half-wit factoids launch from your misinformed brain like clowns from a circus cannon.

Quit lying from time to time, or reading lies and reporting them as your own. Wake Up!

[bobfeld]

05:22 AM on 10/23/2009

If a bank is "too big to fail" then its actually TOO BIG TOO EXIST.

[dart79]

11:46 PM on 10/22/2009

Oh spare me Gibbs. You and Obama lose credibility when you silence people like Barofsky, Warren, and Volker.

[Raster]

10:56 PM on 10/22/2009

Dissing their own watchdog. The truth? The truth? THEY can't stand the truth!

[factotem]

07:08 PM on 10/22/2009

Keep delaying B.O.
It's not do anything for this issue.

[supergenius02]

04:40 PM on 10/22/2009

We all know that Special Inspector General Neil Borofsky is right when he says that Obama has made the banking system worse. Borofsky has been doing all the auditing and publishing reports from intimate knowledge of the TARP numbers and knows Obama has failed. Honesty prevails.

[nomobull]

06:06 PM on 10/22/2009

tarp another bush mess

[JonathanLA]

02:51 AM on 10/23/2009

What the Inspector is saying is not that Obama has made the situation worse by rescuing the biggest banks with taxpayer dollars (which, by the way, Bush started!), he is saying that we need the second part of the equation: stricter regulation of these banks and granting the Fed the ability to unwind them (ie eliminating the implication that anyone is "too big to fail.") Of course, Republicans will only look at the critical words, they won't realize that what he is saying is we need MORE government regulation in order to keep these huge financial institutions from repeating their stupidity! Obama and his team know this and that is why we will have financial institution reform just as soon as we get the health care reform out of the way!

[Aerows]

03:54 PM on 10/22/2009

What I don't understand is if they have money to give out these obscene bonuses, why can't they pay back the money they were loaned? Why not tax the hell out of them if they refuse to pay it back?

[Fotios]

05:39 PM on 10/22/2009

That's where the executive pay cuts come in. Where do you think that TARP money is going? Into their investors hands? In to the pockets of the janitors and receptionists at these firms?

Nope, our tax-funded TARP money is going into the salary increases and bonuses of the recipient's executives.

[Raster]

10:58 PM on 10/22/2009

Those execs didn't buy Congress for nothing. It's just payback.

[NoMoFearNoMoHate]

06:49 PM on 10/22/2009

Some of the biggest firms have already paid back their portions plus dividends.

http://forexblog.oanda.com/20090723/score-one-for-the-taxpayer-as-goldman-sachs-repays-loans/

Last count $73 billion had been repaid but I was left unclear from the reading I did whether that was principal repayment or if it includes dividend profits on those taxpayer dollars as in the case of Goldman Sachs linked above.

[Fotios]

12:09 AM on 10/23/2009

73 down, 627 to go.

[kellymom042]

03:31 PM on 10/22/2009

A year removed from the global economic crisis they created, executives of the financial companies responsible have yet to disassociate themselves of the notion they deserve the obscene sums they pay themselves.
They simply move money from one place to another and take a cut. Yet even after being bailed out by U.S. taxpayers who will shoulder the bill for years to come, the delusional titans of Citigroup, Bank of America, AIG and their brethren believed they were still deserving of stipends that would make a king blush.

Obviously, Wall Street failed to understand Americans had had enough.

While the bankers who hatched the financial shenanigans in lower Manhattan continued to pocket paychecks in the tens of millions, ordinary Americans bailing them out were being handed pink slips as a consequence of the economic train wreck.
Now, a year later, with any grace from God, those who thought they were too big to fail are going to have to answer to those who were too small to save.

[spado]

03:45 PM on 10/22/2009

Well said

[kellymom042]

08:59 PM on 10/22/2009

Thank you!

[rizvisa1]

04:15 PM on 10/22/2009

Why would they understand if they can have their way. What WH or Congress has done to make then understand that ?

[kellymom042]

09:01 PM on 10/22/2009

Nothing really concrete yet...Have you heard the expression: Talk softly and carry a big stick?