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By Lucky Gold
The former watchdog for TARP, the seven hundred billion dollar bailout of America’s financial institutions labeled “too big to fail,” warns that the situation has only gotten worse, not better.
“It’s more dangerous today,” said Neil Barofsky, appearing Wednesday on Amanpour. “The banks are twenty to twenty five percent bigger than they were before the crisis.”
While the banks have gotten bigger, the rules governing – or not governing - them have remained the same: “We haven’t changed the incentives. The presumption of bailout drives these institutions into taking bigger and bigger risks under the presumption that they’ll keep the profits and the taxpayers will eat the losses.”
The underlying principle – or lack of principle – is “this notion that what’s good for Wall Street is good for Main Street.”
Recalling the crisis of “too big to fail,” Barofsky said that notion “permeates every decision they made. So when it came time to rescue homeowners, they built a program that in Secretary (of the Treasury) Geithner’s words was more about foaming the runway for the banks by extending out the foreclosure crisis, rather than assisting homeowners.”
Given that history, Barofsky added, “It’s very disheartening to see our government go over to Europe and tell them over and over again: ‘You need to do what we did over here in the United States.’ As if that has been the magic elixir that has cured all of our problems. “
Not only do we have to rescue them but they get to operate above the law
Asked how history will judge Secretary Geithner’s time in office, Barofsky was unsparing: “I think it’s going to be a very dark picture for him looking back at his legacy. I mean Libor (the interest rate fixing scandal), for example, apparently his institution had full knowledge that there was active manipulation of this rate going on and he called a meeting and sent an e-mail, but didn’t raise the alarm to the markets or to the Department of Justice.”
Far from being an isolated incident, “it’s all part of a pattern of activity, this sort of scandal after scandal. Because the other side of ‘too big to fail,’ not only do we have to rescue them (the financial institutions) but they get to operate above the law. Because they know and we know, that if we took dramatic action against them we could bring them down and then bring down the entire economy.”
“If we don’t start holding individuals accountable,” said Barofsky, “why would we possibly think they will change their behavior? They’re just going to take advantage and profit.”
However, he did say it was not too late to change the system: “You have to get rid of the corrupting influence and that means break up the banks. “ And in addition, he said, “We have to reward regulators for doing their jobs, not punish them…It’s supposed to protect the taxpayer, not enable the banks.”
this is a sad confirmation, that everything the Occupy Wall st. movement was all about, is true. and the politico's failed response only tells us, that nothing is going to happen to change anything.
Reelect Obama and the Democratic party and we might have a chance at turning this around. The republicans will only accelerate us closer to the true edge of the cliff. Obama has overseen an administration that prevented all out anarchy and the chaos that we would face in an all out depression. With a democratic house and senate, we could have powerful new deal laws pass that could take control of the situation and put people back to work.
stop with your liberal propaganda. Is Obama who caused this too. Why are democrats still blaming the republicans after 4 years of Obama? Let me tell you this both republicans and democrats are the same. Both party will do the same thing with same policies cause the banks always own America. Face the fact and know the banks own America and there is nothing you can do about it. The rich will always rule the poor and that has always been the cause since the start of human civilization. That is why Communism and other ideology came out but failed big time.
Democrats and Republicans just switch places throughout history on their own policies. Just look at today Democrats calling the Republicans racist which is very funny cause back in the civil war the Democrats are supporting slavery but now they have a black president. Why are there only two party in America with over 300 million people? Only two party allow to exist? Why are all the US president either a Democrat or Republican? But we call this a democracy right.
While I do sympathize with your reluctance to place the Republican "profit at any cost" machine back in control, I do find
the," just reelect Obama" and the Democratic incompetents (Harry "crap special interest nepotism" Reid) back in control. While I do feel that a disaster can be averted by proper prospective, I really don't think the average American wants to be protected by a pro totalitarian police state martial law leaning progressive Democratic administration who are the lap dogs of an underlying Agenda 21 save the planet for the elite oligarchy future.
Wow, seriously?! Obama pushed for the bailouts of the banks that have broken laws that would have seen anyone else in prison for life. Obama hired all of these idiots to office who are tied to the banks! Obama (who I unfortunately voted for) is a smooth talker, and all that hot air feels great with the COLD hard reality that he and the dems have yet to step up and actually lead FOR the people. Man, get real!
Couldn't have said it better myself!
Dear Obama, you are a sad failure of a President and I will NOT vote for you again!
You have wasted your time in office and let us all down: you have accomplished nothing.
Just remember that this all happened under Obama's watch!
I wrote Mr. Barofsky about the illegally treatment I was receiving at the hand of Wells Fargo Bank who was claiming to be my lender when in fact they were not, and illegally should not have been servicing my loan as I was a part of the dysfunction of Washington Mutual Bank mess.
Government is not letting on to all the FHA & VA loans that at one time belonged to Washington Mutual Bank until the loans were pooled and used as the alleged underlying collateral for the Ginnie Mae Mortgage Backed Securities (MBS) that were sold, "Not home mortgage loans"!
Banks were faking as if they were processing government loan for HAMP &FHA & VA HAMP however the fact is that the borrowers were not indebted to Ginnie Mae who is not a lender by law and cannot originate, buy or sell a home mortgage loan at all! Since Ginnie Mae is not a lender it cannot change a interest rate or term and cannot authorize this to take place because they do not have a financial interest in the loans.
That the borrowers assumed that when Wells Fargo started servicing FHA & VA loans starting with the Jul 31, 2006 servicing agreement we the borrowers thought that Wells Fargo had purchase the loan instead this was not the case as Ginnie Mae from the day the loan was accepted into the pool was supposed to be in physical possession of the Blank Notes.
One must ask how does a non-owner of a loan transfer to another servicing rights to something its not illegally able to receive? Once Washington Mutual Bank was seized on Sept 25, 2006 and it is exposed that these government loans are not included in the JPMorgan give away from the FDIC, how does Wells Fargo continue to service the loan as Ginnie Mae is only holding the Blank Notes while its know by the industry that Ginnie Mae cannot financially own the loans because they cannot buy them.
You have the World's largest "shell game" being committed where a service/bank submits to courts that they are the "holder in due course" so they can administratively foreclosed, bypassing judicial system where proof of ownership is required and there is not proof because Ginnie Mae nor Wells Fargo Bank did not pay for all these loans.
As a former mortgage loan officer and current victim of Wells Fargo Bank I can break down every single loan with only the records at Ginnie Mae and expose the entire operation as I have been writing this White House for over 3.5 yrs trying to explain, however you need a Harvard Degree and not have a clue how the mortgage market worked to be listen too!
I am a conservative free market thinker. Obama is very smart but a terrible leader. I believe he is letting them bring down the house. Capitalism should mean win/lose but the game can't be rigged and it is – If you are good, you win more than you lose but there disparity. William Black, a democrat who helped clean up the S&L crisis is the man to listen to – Tim G should be removed – remember, it was not loan defaults that caused the crisis, they were nominal at the time – It was a guy in Norway who figured all this paper is junk and the collateral is worth about half of what was stated – so they bailed out these securitized instruments – And what should have been done is to bail out the banks but pass the money through main street because they are the underlying creditors – This thing wreaks of antipathy as if some of these megalomaniacs like to see suffering and destruction.
Electoral reform and change 'residential/commerical' banking into a utility like water, gas, and electric. Cap their profits. If we do just these two things I think you fix a slew of problem and roadblocks in our current system.
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