With all the bad news about jobs coming out, most of the focus has rightly been on the plight of working people across the country. The big banks which helped usher in this economic crisis have been largely forgotten. The general assumption is that they're doing just fine. And they are, thanks in large part to you and me, the American taxpayer. But as we try to struggle back to prosperity, have we learned the lessons that led to this crisis? Â One man in the middle of it all says absolutely not.


In 2008, Neil Barofsky was working as a prosecutor in the U.S. Attorney's Office in the Southern District of New York, taking down drug lords and white-collar criminals, when his boss urged him to take on a new case: overseeing the $700 billion Wall Street bailout, known as TARP. The Bush White House wanted to know if Barofsky, a lifelong Democrat who had recently contributed to the Obama campaign, was interested in moving to Washington, DC to become TARP's Special Inspector General, a watchdog over how the money would be spent.


By December, 2008 Barofsky was nominated, confirmed, and had hit the ground running. Nearly two and a half years later, Barofsky has resigned and is back in New York. Â He recently sat down with me and shared some alarming news.


"You can't look at what happened in the run-up to 2008 and see how it's not going to repeat itself, given what we've done," Barofksy told me in a lengthy interview that aired Tuesday on HDNet's "Dan Rather Reports." Â


What we've done, Barofksy says, is use taxpayer money to create an explicit promise to the big banks that they will be bailed out again.  The landmark financial reform bill known as Dodd-Frank was supposed to end this problem, and President Obama and Treasury Secretary Tim Geithner have repeatedly stated there will be no more taxpayer-funded bailouts.  "You shouldn't believe them," Barofsky says.  "Not right now."  That's because, at the government's urging, the banks are even bigger than they were in 2008, and much of what Dodd-Frank proposes has not been implemented.


While TARP may have achieved its goal of averting a financial Armageddon, Barofsky says the program had other goals too. Â The Bush Administration sold the legislation to a skeptical Congress as a way to help homeowners stay in their homes. Â "The program was supposed to restore home owning. Â It was supposed to keep up to 4 million people in their homes and not lose them to foreclosure." Â Instead, he says the TARP program has helped 600,000 homeowners, while one million people a year are having their homes repossessed.


Another promise of TARP was to jump-start lending to small businesses.  But Barofsky says, the government failed to require the banks to actually lend out the money they were given.

Barofsky says it's enough to make your blood boil.


"There were no strings attached," Barofsky says.  "So what happened was, the banks got this money and they decided it was in their best interest and the best interest of their shareholders not to lend it out, but to use it to accumulate capital."   


"You should be outraged," Barofsky told me.  "Because that wasn't the deal.  Perhaps you should be a little bit mad at Wall Street.  But you really should be mad at your government for not fulfilling the promise that they made to you... when we gave all the money to the banks." 


Barofsky says that only days after he took the job, he suggested that the Treasury Department require banks to publicly report how they were using the bailout money.  "Dan, you would have thought I had declared a Communist revolution from their reaction.  I was told that this idea was terrible."  It took more than a year before the Treasury Department reversed itself and implemented his suggestion. "But by then, the largest banks were well on their way to pay back the funds."  And, he says, the ability to force Wall Street, either by carrot or by stick, to lend to Main Street was lost.


Barofsky resigned in March.  He's now teaching law at New York University and telling anyone who will listen that there will be a "next time" and it will be much worse. He, for one, remains skeptical that Wall Street and Washington can get it together to fix this mess. 


We will be posting more outtakes from our interview on the Dan Rather Reports Facebook page in the coming days.
Dan Rather Reports airs Tuesdays on HDNet at 8 p.m. and 11 p.m. ET. This show is also available on iTunes.
Robert Scheer: Geithner and Goldman, Thick as Thieves
Jane White: Blame Grover Norquist for Dismantling Financial Services Reform, Democracy
David Coates: Punishment or Pushback: Financial Regulation in the Midst of Recession
But maybe a more expansive title would have attracted more reader curiosity than "Taking On TARP".
..... Just a thought.
It appears increasingÂly likely systemic failure, final collapse, implosion of this unstable HouseOfCards could be triggered by combinatioÂn of intended or unintended shocks reverberatÂing through the financial system:--
1)The "chicken" game of political brinksmansÂhip over national debt limit could miscalculaÂte and push beyond the brink by August, or 2012election, inducing uncontrollÂable waves of debt default.
2)Some foreign creditor banks could freakout by Washington's cumulative irresponsiÂbilityÂ, rush for exit, inducing financial market panic.
3)Some "GoldenShaÂrks" WallStreet casino bigbanksteÂrs could game final exit when inevitable collapse appears imminent, with some "CreditDefaultSwap" short trade on USDollar, giving the psychopathic manipulatoÂrs motive and incentive to trigger artificial "electroniÂc bankrun" (like September2008) and demand CongressionalTreasury bailout. They've done it before, would do again. Either way, they're covered.
http://www.youtube.com/watch?v=pD8viQ_DhS4
4)FedReservÂe and USTreasury could skid into region of irreversibÂle accelerateÂd slide towards hyperinflaÂting dollar printing (euphemistÂically labelled "QuantÂitativeEasing"), like Weimar Republic. This happens when debt interests and short maturity debts accumulate faster than being paid off, in selfreinforcing imploding spiral.
Way things are going, either people's blood boil over the top now, or it'll spill over into the streets later.
Not conceivable? Before Sep. 2008, nobody would have thought that a 550 Billion dollar
"electronic bank run" was possible. Well people, check the facts, and think again:-- (@2:00)
http://www.youtube.com/watch?v=pD8viQ_DhS4
Is it conceivable that some financial entity in command of moving trillions of dollars around in the financial markets could conceivably have incentive, motive, and opportunity to trigger such a high risk potentially catastrophic event ? To contemplate that question and accurately assess its probability of happening, one needs to understand psychopathic personalities and mindsets. Here's one poignant revelational blog article by Marcella Mroczkowski --
"Empathy and Psychopathy as Competing Value Systems in Politics and Economics:--
http://www.huffingtonpost.com/marcella-mroczkowski/danger-empathy-and-psycho_b_667637.html
Connect the dots in history, and do a rational prognosis based on known facts and predilections.
Would such an event be a crime?
Who would and how would they stage it?
Can it be prevented from happening in the future?
Would such an event trigger an unpredictable uncontrollable collapse of the financial system in USA? in financial markets around the world?
We tried that back in May of 2005 when Corporations were creating Millions of Shares of Stock to habd out as Bonuses and Options they were cashing out and robbing the Investors and Corporation t the same time.
They knew a crash was comming and to think they did not is to give them license to do it again.
Everyone should watch the PBS Frontline movie, The Warning! It's about a year or so old andI'm not sure it is still available. I think you might be able to find it on Nexflicks?
The thought process was that if they were FDIC insured that they could stem off a run on the investment banks. They were too big to fail so they made them bigger. Doesn't that make sense?
I want our money back! NOW! I want John Boo Hoo Boehner to get pissed off about this and stop trying to screw the American people who did not have a say in what Washington did with our tax dollars!
Please just go away. You are an embarassment to all people who care about journalism.
Bud