The former bailout watchdog says President Obama "gets an F" for his Wall Street reforms.
"He's fighting to maintain the status quo of the too-big-to-fail banks and fighting against bipartisan efforts to break them up," said Neil Barofsky, the former special inspector general of the Troubled Assets Relief Program (TARP), the U.S. bank bailout program, in an interview with The Huffington Post on Wednesday. "The core stuff that was supposed to go toward resolving too big to fail has come up way too short."
President Obama touted the Dodd-Frank Act at the presidential debate on Tuesday night. "I committed that I would rein in the excesses of Wall Street, and we passed the toughest Wall Street reforms since the 1930s," he said.
Barofsky said that though each part of the claim is "literally true," Obama did not actually rein in Wall Street because he didn't break up the banks.
There was significant bipartisan support in Congress for breaking up the big banks after the financial crisis, Barofsky said, but the administration "strongly opposed it." The Obama administration did in fact resist calls to break up the banks. As a result, Barofsky predicted that there will likely be another financial crisis and bank bailout.
"Once you're in the crisis," he said, "will you use those tools [in Dodd-Frank] to wind down the banks and risk a global financial depression, or are you going to bail them out again? You're probably going to bail them out again."
Barofsky added that it is unclear whether Republican presidential nominee Mitt Romney would be any better at financial reform. Romney's advisers are divided, he said, and Romney has failed to provide any specifics beyond promising to repeal Dodd-Frank and replace it with something else.
"Certainly repealing Dodd-Frank and not doing anything else to deal with the problem would be worse than what we have today," Barofsky said. "My strong suspicion is that [Romney] would no more resolve the problem of too big to fail than Obama has done, and probably do a bit less."
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