Ex-TARP overseer denounces
US government cover-up of Wall Street crimes
31 July 2012
In
interviews prompted by the publication of his new book (Bailout) on the $700 billion
US bank bailout scheme—the Troubled Asset Relief Program (TARP)—the former
special inspector general for the program, Neil Barofsky, has denounced bank
regulators and top officials in the Bush and Obama administrations for covering
up Wall Street criminality both before and after the financial crash of
September 2008.
In an
interview last Thursday with the Daily Ticker blog, Barofsky accused Treasury
Secretary Timothy Geithner of facilitating the banks’ manipulation of Libor,
the global benchmark interest rate, when he was president of the Federal
Reserve Bank of New York in 2007-2008, prior to his joining the Obama
administration. Recently published documents show that as early as 2007,
Geithner knew that London-based Barclays Bank was submitting false information
to the Libor board to conceal its financial weakness.
Geithner merely wrote to the Bank of
England suggesting certain changes in the Libor rate-setting mechanism, but
made no public statement and failed to notify regulators at the US Justice
Department, the Commodity Futures Trading Commission and the Securities and
Exchange Commission, even though major US banks were alleged to be involved in
the rate-rigging fraud.
In his interview, Barofsky rejected
Geithner’s claims to have acted appropriately. Calling the Libor scandal a
“global conspiracy to fix one of the most important interest rates in the
world,” the former TARP inspector general said, “[Geithner] heard this
information and looked the other way. Geithner and other regulators should be
held accountable, they should be fired across the board. If they knew about an
ongoing fraud, and they didn’t do anything about it, they don’t deserve to have
their jobs. I hope to see people in handcuffs.”
In the same
interview and others given over the past week, Barofsky has spoken in scathing
terms of the domination of Washington by Wall Street and the subservience of
both major parties to the financial elite. “It was shocking,” he told the Daily
Ticker, “how
much control the big banks had over their own bailout and how they often would
dictate terms of some of the TARP programs and the overwhelming deference shown
by Treasury officials to the banks. I saw no differences in these core issues
between the Bush and Obama administrations.”
In an interview with CBS News’
Charlie Rose on July 23, Barofsky referred to key elements of his account of
TARP, including the lack of any restrictions on the banks’ use of bailout funds
and the fact that they were not even required to tell the government what they
were doing with the taxpayer money that had been handed to them.
“When I got to Washington,” he said,
“I saw that it had been hijacked by a small group of very powerful Wall Street
banks... It’s not Democratic, it’s not Republican, it’s across political
barriers… [Geithner] oversaw a policy that saw our largest banks, the
too-big-to-fail institutions, get bigger than ever and more powerful, more
politically connected.”
In his book, Barofsky derides the
cynicism of the claims made when President Bush, candidate Obama and
congressional leaders of both parties were seeking to ram through the TARP law
over massive popular opposition that the bailout would benefit Main Street as
well as Wall Street. He notes, for instance, that the government’s mortgage
modification program—billed as a means to help millions of homeowners—has
disbursed only $3 billion out of the $50 billion set aside for it.
Barofsky, who served as the Treasury
Department’s special inspector general for TARP until his resignation last
February, is well placed to document the collusion of the government with the
banks. He issued numerous reports while in his TARP post exposing the lack of
any real government oversight over the taxpayer money funneled to the banks, as
well as decisions ensuring that Wall Street firms such as Goldman Sachs
recouped tens of billions of dollars in potential losses at the public’s
expense.
Deprived of
any enforcement powers under the TARP law drafted by Wall Street lawyers and
ratified by Congress, Barofsky was simply ignored by Geithner and the Obama
administration and his reports were largely buried by the media.
Barofsky’s book has received a
similar response from the media, as did reports issued last year by the
Financial Crisis Inquiry Commission and the Senate Permanent Subcommittee on
Investigations documenting in detail fraudulent and illegal activities by the
banks in the lead-up to the financial crash of 2008.
Four years
after the crisis precipitated by the banks, not a single top banker has been
prosecuted, let alone convicted. Meanwhile, the same bankers, and the
government officials who shielded them and ensured that they grew even richer,
are demanding that American workers accept the “new normal” of wages at $13 or
less, along with the destruction of pensions, health care and working
conditions.
For all of his exposures, Barofsky,
a Democrat, fails to draw the requisite conclusions, suggesting that popular
rage can “sow the seeds for the types of reform that will one day break our
system free from the corrupting grasp of the megabucks.”
The
criminality of the financial system and the complicity of all of the official
institutions are not, however, mere aberrations or blemishes on an otherwise
healthy system. They are expressions of the putrefaction and failure of the
capitalist system itself. Its mortal crisis is reflected above all in the
ever-greater scale of social inequality.
There is no way to break the power
of the financial oligarchy outside of a mass working class movement armed with
a socialist program, including the seizure of the ill-gotten wealth of the
financial mafia and the nationalization of the banks and major corporations
under the democratic control of the working population.
Andre Damon and Barry Grey
The authors
also recommend:
JPMorgan
scandal: The tip of the iceberg
[17 July 2012]
[17 July 2012]
Libor
scandal exposes banks’ rigging of global rates
[6 July 2012]
[6 July 2012]
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