Neil Barofsky is not a household name, but he knows as much about what went wrong with the taxpayer bailout of Wall Street brokerages and national banks as anybody. In his scathing new book, Barofsky says taxpayers got shafted while the rich got richer.
In “Bailout,” Barofsky writes that when he became the official watchdog for taxpayers, “I hadn’t yet understood the degree to which the entire crisis was unleashed by the greed of a small handful of executives who exploited a financial system that guaranteed no matter what risks they took, they’d be able to keep the profits ...
“I had no idea that the U.S. government had been captured by the banks and that those running the bailout program I’d been charged with overseeing would come from the very same institutions that had both caused the crisis and then become the beneficiaries of the generous terms of their bailout.”
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Four years ago, Barofsky was an assistant federal prosecutor. To his surprise, Barofsky received a job suggestion from his boss, Mike Garcia, U.S. attorney for the Southern District of New York. The job: “special inspector general in charge of oversight for TARP.”
For those who have never been Washington insiders, here is a translation:
• An “inspector general” is supposed to make sure all federal employees within an agency are working efficiently and honestly. Those who become inspector general — within the Defense Department, for example — rarely make friends with their co-workers. The word “special” in front of “inspector general” means the position will probably be temporary, because the agency involved has been created for a limited purpose.
• "Oversight” carries an abnormal meaning in Washington. In common parlance away from the nation’s capital, it suggests a negative, as in “Honey, don’t get angry, it was an oversight that I forgot our wedding anniversary.” In Washington, the word means “scrutiny.”
• TARP refers to the “Troubled Assets Relief Program,” probably the most expensive federal welfare giveaway in the history of the United States. “Welfare” traditionally has meant giving small amounts of money to poverty-stricken individuals. But the welfare payments coming from TARP would be given to savings banks and investment banks supposedly “too big to fail.”
Imagine Barofsky’s surprise when he heard the suggestion from Garcia, a Republican political appointee, who said the new job would be filled by President George W. Bush. Barofsky was a Democrat who had contributed to the presidential campaign of Barack Obama.
Well, Barofsky applied for the job and received the appointment, remaining as special inspector general until March 2011. His account of those years is a true expose. He names names of powerful men and women trying to sabotage the honest administration of the bailout.
Although Bush and Obama do not escape Barofsky’s whistle blowing, the chief villain is Timothy Geithner, the headline grabbing U.S. treasury secretary and former president of the New York Federal Reserve Bank.
The amorality and corruption delineated by Barofsky can be described fairly as “breathtaking” and “disgusting.”
Taxpayers who feel helpless in the midst of the extended economic recession are likely to feel energized to metaphorically blow up the system after reading Barofsky’s account.
Steve Weinberg reviews books from his home in Columbia, Mo.
‘Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street’
By Neil Barofsky
Published by Free Press, 288 pages, $26
On sale Tuesday
