Christiane looks at why protesters are saying the World Cup only benefits outsiders.
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.”