"There's Going to Be Scandal Involved in This Bailout. It Is Unquestionable'

An important interview! Again and again, if we look, what we see exposed is the long process of government corruption and within both major political parties, the promotion of the status quo and the propaganda which sustains it, the prioritizing of power and profit over the needs of the people and the planet, and the overall insidious influence of the oligarchs and special interests wedded to predatory capitalism and its ideology of domination — AND the  enormity of the suffering left in its wake. Again and again what we see, if we are informed, is the undeniable great and urgent need for dramatic systemic and truly revolutionary change. 

Naomi Klein has also sounded the alarm for decades in her extraordinary work, with this being the brilliant video she did for the Intercept on "coronacapitalism"
— https://theintercept.com/2020/03/16/coronavirus-capitalism/. 

Bless Bill Moyers and Naomi Klein and countless others for being among those who have spent decades offering us the truth. What we do with that truth is up to us as individuals and collectively. We're all in this together. — Molly

Announcer: How do you prevent two trillion dollars from being contaminated by corruption? You ask a man who can’t be corrupted – a straight arrow who has already stood up to some of the most powerful people on Wall Street and in Washington.

His name is Neil Barofsky, and he’s Bill Moyers guest on this edition of Moyers on Democracy. Welcome.

As a young federal attorney and prosecutor Neil Barofsky had sent crooked financiers to jail and brought Columbia drug dealers to justice. When overreaching and greedy bankers almost brought the American economy down a dozen years ago, Congress raced to the rescue with a bailout of over $750 billion dollars, known as the Troubled Asset Relief Program. As its watchdog, President George W. Bush tapped Neil Barofsky to be TARP’s chief inspector general, its top cop, with a mandate to flush out waste, fraud and abuse.

He would soon be recognized “as one of the most impressive political officials in Washington.” This week Bill Moyers asked him to recollect his experience with TARP and how he would safeguard the two trillion dollar government program passed last week by Congress to rescue an economy crippled from the coronavirus.

They talked by telephone from their respective home offices, hopefully shuttered against the virus itself. Here is Bill Moyers.

* * * * *

Excerpts from this interview:

Bill Moyers: Were those two goals accomplished — to jumpstart bank lending, and to protect homeowners from foreclosure? 

Neil Barofsky: Sadly, no. The crisis was averted. And that’s a good thing. And lending restarted, which was a good thing. But the goal of increasing lending, of giving an opportunity for Main Street businesses to get the capital that they needed, and the credit they needed, that never really happened.

I think in part because but it wasn’t really that strong of an effort within the Treasury Department to keep an eye towards increasing lending, towards helping Main Street. When we suggested that conditions be imposed on the funds to make sure that the money was used by the banks in order to increase lending, we were shot down.

When we suggested that it at least be incentivized, that there be favorable interest payments on the loans and the type of preferred stock that was being acquired by the Treasury Department to give the banks an incentive to increase lending, that too was shot down.

And you never saw that increase in lending that was promised. And as far as the homeowners, that was even more devastating. Because there was so much money that was made available to help struggling homeowners. Hundreds of billions of dollars that could have been used to help those who were losing their homes and saw their lives devastated.

And the Treasury Department simply refused to deploy that money. 

And the decision was made quite frankly to let them rot. And what was rolled out was an ineffective program that in many cases made it worse for some of those struggling homeowners than if they had never entered the program at all. Because it encouraged predatory practices by the banks.

And the thing that underlined the failure of both of these policies was the same. The concern was never really about helping homeowners or helping small businesses. It was only about saving the banks for the sake of saving the banks. And so when the Treasury Secretary was confronted by now-Senator Elizabeth Warren, then the head of one of my sister oversight agencies, about the failed housing programs, he [Treasury Secretary Tim Geithner] explained in very plain words that the point of this program was, and I quote, “To foam the runway for the banks.”

In other words, too many foreclosures too quickly could be devastating to the banks’ balance sheets — [and] could send them back for additional bailouts — and that was what they were concerned about, not the taxpayer, not the people who were supposed to be helped.

And when you divorce policy goals with the actual policies as they’re carried out, you’re not going to achieve the important policy goals that serve as the justification for trillion dollar bailouts. And that’s what we saw then. And that’s what I hope we don’t see now......

Bill Moyers: So President Bush appointed you in the last year of his administration, as the economy fell apart, the banks were crashing. And you then served under President Obama when he came in. Was the pressure greater from the Bush people than it was from the Obama people?

Neil Barofsky: I think the overall feel of everything really didn’t change that much. I think when I was there, I would sort of remember circling January 20, 2009 on the calendar because I thought, “Okay, once we get past the Bush administration and the Obama administration people come in, this is gonna be completely different. 

Everything’s going to change. There’s gonna be more of a focus on worrying about the Main Street, and people who are supposed to benefit.”

And, of course, when that day came and went, very little had changed. Some of the personnel stayed the same. But even the new people who came in running the program really had that same philosophy as those in the Bush administration of prioritizing saving the banks over everything else.

And there was a thin-skinned-ness, for sure, among that Treasury Department, that any type of criticism, constructive or otherwise, was not viewed favorably, and was viewed as being political and not necessarily motivated by a desire to serve the job, or to make the programs better.

Bill Moyers: Well, why were they pressuring you? What were you doing that they wanted you to cease?

Neil Barofsky: I think they didn’t appreciate the fact that although I was appointed by President Bush, a Republican, I was and am and have been a lifelong Democrat. And I think that the notion that someone who is a Democrat would be critical of a Democratic administration, reeked of a type of disloyalty.

And Washington is a very political town, Bill, as you know better than anyone. And what I think was hard for people to understand was that I didn’t have a political job. It wasn’t my job to go softer on one administration or harsher on another administration because they happened to be within the same political party that I was.

And I think that that really weighed on people, and felt like it was an act of disloyalty. And that if I’m criticizing a Democratic president, that must mean I’m carrying water for the Republicans. And, of course, it couldn’t be any farther from the truth.

I was not politically motivated in any way. And I believe that by being critical of the Democrats or the administration, I was trying to get them to be better. And when you think about where we are today, and you think about the election of 2016, can you imagine how different our political landscape might look right now if the Obama administration took hundreds of billions of dollars and supported that wide part of the Rust Belt that ultimately left the Democratic party in 2016?

By saving those people, keeping them in their homes, beating against the perception that the priority was for Wall Street, and not for Main Street. So I felt like what I was doing was just to help and advocate for [the] American people. And I think that if the administration had listened a little bit more closely and a little bit more carefully, we could be in a different situation right now, politically.

For the full interview, please go here: https://www.commondreams.org/views/2020/04/03/theres-going-be-scandal-involved-bailout-it-unquestionable