Nice Job Jack Kelly!!
I Look Forward to Reading More of Your
"Call It Like It Is Articles"
Sunday, October 31, 2010
By Jack Kelly, Pittsburgh Post-Gazette
Treasury Secretary Timothy Geithner is all that remains of President Barack Obama's original economic team. Budget Director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, are long gone, and Lawrence Summers, chairman of the National Economic Council, plans to be back at Harvard in January.
Neil Barofsky wouldn't be sad if Mr. Geithner were to depart, too. Who, you may ask, is Neil Barofsky? And why should you care what he thinks?
Mr. Barofsky, 40, is something of a prodigy. After earning a degree in economics from the Wharton School of Business at the University of Pennsylvania and a law degree from New York University, Mr. Barofsky joined the office of the U.S. attorney for the Southern District of New York, where he prosecuted international drug gangs and later headed the mortgage fraud group.
President George W. Bush tapped Mr. Barofsky to be the special inspector general for the Troubled Asset Relief Program, even though Mr. Barofsky reportedly is a Democrat. TARP, you'll recall, is the bailout of financial institutions that followed the bursting of the subprime mortgage bubble.
TARP consists of 13 programs, for which $474.8 billion has been obligated. TARP recipients have paid back much of it, and $178.4 billion in TARP funds remain outstanding.
On Oct. 26, the second anniversary of TARP, Mr. Barofsky issued a report on the program to Congress. It concludes that, while TARP prevented financial and economic collapse, it has made possible the payment of record bonuses to Wall Street bankers, failed to increase lending to small businesses and fallen short in reducing unemployment or preserving home ownership.
TARP also is encouraging big banks to return to the risky behaviors which caused the last financial crisis, and has increased the risk the next crisis will be worse.
"The biggest banks are bigger than ever, fueled by government support and taxpayer-assisted mergers and acquisitions," the report said. "The repeated statements that the government would stand by these banks during the financial crisis has given a significant advantage to the larger 'too big to fail' banks, as reflected in their enhanced credit ratings borne from a market perception that the government still will not let these institutions fail."
Treasury officials have exaggerated TARP's successes, bungled administration of its programs and concealed information Americans have a right to know, the report said.
J.P. Freire of the Washington Examiner noted Monday that the Treasury Department has contracted with a private firm for a Freedom of Information Act specialist with experience in the "use of FOIA/PA exemptions to withhold information from release to the public."
"When Treasury refuses for more than a year to require TARP recipients to account for the use of TARP funds, or claims that Capital Purchase Program participants were 'healthy, viable' institutions knowing full well that some are not, or when it provides hundreds of billions of dollars in TARP assistance to institutions, and then relies on those same institutions to self-report any violations of their obligations to TARP, it damages the public trust to a degree that is difficult to repair," Mr. Barofsky's report said.
"When the government promotes programs without meaningful goals or metrics for success, such as its mortgage modification programs, or when it makes critical and far-reaching decisions, such as pushing for dramatically accelerated car dealership closings without considering the potential for devastating job losses, or when it fails to negotiate robustly on behalf of the taxpayer, as it did when agreeing to compensate [AIG's] counterparties 100 cents on the dollars for securities worth less than half that amount, the government invites public anger, hostility and mistrust," his report continued.
Financial news is boring, and the TARP revelations are embarrassing to Democrats, which is probably why most journalists have paid little attention to the Barofsky report.
But as the report said, what's going on now "dangerously undermines (the government's) ability to respond effectively to the next crisis." We need to understand what's happening, and why.
Telling us what's happening and why is the job journalists are supposed to do. If journalists were doing their jobs, we should know at least as much about TARP as we do about Delaware GOP Senate candidate Christine O'Donnell's teenage dabbling in witchcraft. That we don't is contemporary journalism's enduring shame.