Approaching the four-year anniversary of the bank bailout of September 2008, Neil Barofsky, the gentleman given the title special inspector general for the Toxic Asset Relief Program, is offering some details from an insider’s perspective of what has been only speculation up to this point.
Barofsky, author of the new book Bailout, also published a first-hand account in Bloomberg.com of his “oversight” of the $700 billion bailout of financial institutions that spanned the administrations of both George W. Bush and Barack Obama.
The former SIG shared some harsh realities:
• The Department of Treasury was assigned to “preserve homeownership” yet made changes at a “glacial pace” that contributes to “the current economic malaise;”
• Banks “received broad immunity from future civil cases arising out of their widespread use of forged, fraudulent or completely fabricated documents to foreclose on homeowners” within terms of the bailout;
• “The top banks are 23 percent larger than they were before the crisis. They now hold more than $8.5 trillion in assets…The risk in our banking system is remarkably concentrated in these banks, which now control 52 percent of all industry assets, up from 17 percent four decades ago;” and
• “The financial markets continue to bet that the government will once again come to the big banks’ rescue.”
The person tasked with enforcement and oversight of the TARP scheme has a dismal assessment of the program. Barofsky found that the institutions that engaged in high-risk investments that failed have become larger. The losses generated by these large private institutions were covered by the average taxpayer. Worst of all, very little has changed.
Barofsky’s conclusion: “The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.”
The arrogant politicians and bureaucrats who believe they can regulate around the power of natural market forces and engage in cronyism are, ahem, toxic assets, indeed.
related articles »
WASHINGTON — U.S. banks are ending the year with their best profits since 2006 and fewer failures than at any ...
Regions Financial Corp. said Wednesday it has repaid $3.5 billion received during the 2008 financial crisis, the largest outstanding bailout ...
One of Walker County's biggest banks reopens today under a new flag after soured real estate loans helped push the ...
In its sixth acquisition in less than a year, a North Carolina bank holding company will pay $217 million to ...
Look closely at these numbers and try to understand what they mean.
Current European Tax Rates... United Kingdom
Income Tax: 50%
VAT: 17.5% TOTAL: 67.5%
France
Income Tax: 40%
VAT: 19.6% TOTAL: 59.6%
Greece
Income Tax: 40%
VAT: 25% TOTAL: 65%
Spain
Income Tax: 45%
VAT: 16% TOTAL: 61%
Portugal
Income Tax: 42%
VAT: 20% TOTAL: 62%
Sweden
Income Tax: 55%
VAT: 25% TOTAL: 80%
Norway
Income Tax: 54.3%
VAT: 25% TOTAL: 79.3%
Netherlands
Income Tax: 52%
VAT: 19% TOTAL: 71%
Denmark
I! income Tax: 58%
VAT: 25% TOTAL: 83%
Finland
Income Tax: 53%
VAT: 22% TOTAL: 75%
The current outrageous numbers in Europe didn't start out as outrageous either. They started out as minuscule - right around the 1% or 2% where they will start out in the United States. Magically, however, they ran up over the years to where they are now. Expect the same thing here.
It's time to take a hard look at reality. Greece is a perfect example. Despite the socialism system that has ruled this country for decades, with a 65% tax rate, they are drowning in public debt, would have defaulted without hundreds of billions in bailout money from the EU, and still. . .20% of their population lives in poverty. What has all that socialism money bought, besides ultimate power for the politicians running the show? Do you think these people are "free"? They are slaves to their economic "system."
The Bush and Obama bailout has been a success as history will prove. The fact that this newspaper still exists and we who comment from our computers should be proof enough. The near-depression hangover still exists as the feds continue to ponder what to do next. The many who continue to think this country can live like "bubble boy" in our own little financial bubble better wake-up to reality.
joneses, you have made an excellent point. There is no question what so ever, we are headed for socialism. The distinctions between public and private keep diminishing. It is a very sad thing to watch as a citizen, because socialism will fail and it defies EVERY principle our country was founded upon.
What made our country great was a supply and demand, free market economy. Our country does not have a "bubble" mentality, but we did give away our industry and success in lop-sided free trade agreements that benefited everyone, but our country. People that believe we just need to be a "global economy" one world, don't understand the full implications of what they are suggesting.
NAFTA provisions benefited other countries, more than our own. The government administrators that cut these deals did not love the United States of America, they literally gave away our country.
http://economyincrisis.org/content/why-free-trade-hurts-america
http://www.cbsnews.com/2100-18563_162-20089118.html
FYI. Our country started into socialism over 200 years ago when the requirement to elect the president was removed from the voter and placed into the hands of state electorates and the nominated supreme court.
Spending by itself is neither bad nor good. Failing to pay (tax) for what is spent leads to ruination. Failing to pay our bills as we spent the money has pushed into insolvency whereby only through some form of default can we recover.
Certainly the money shouldn't have been spent, but that is now history. Better to address how we make a new start. Who gets hurt the most in our coming default? Do we allow the bond and debt holders to take their losses or do we inflate the currency and create a huge backdoor tax that impacts most on those with the least? Are we going to allow our credit event to unwind or is the government going to intervene?
We already know the likely answer. Our government is going to monetise the system, devalue the dollar, and only the financially agile will be spared deep pain. Unfortunately, because the debt is so large (and growing), this process will drag on for years with the US losing altitude all the while. We are in a slow-motion collapse interspersed with mini bouts of hope interspersed.
Far better, IMO, would be to face the music now, take the necessary defaults, get it behind us and try to rebuild a better system from the ruins. Either way, many people are hurt badly, but the government solution of cheapened money can only be a siren song down the wrong road.
I'm not seeing much actually replying to the point of this editorial.
If they want to repeal the Gramm-Leach-Bliley Act, and go back to Glass-Steagal, they should say so.
It also seems they want the government to intervene to prevent overly large bank operations. They should say so.
Or they can admit that it's lack of regulation to prevent what they don't want that is at fault. Surely that wouldn't be too much.
I suppose that we can say that regulations matter if they are enforced.
Selective enforcement and crony enforcement agencies are now the norm. The debate about regulations means very little with a government that cannot govern itself. The US is apparently too big to govern itself well.
Let's read the last two lines of the above editorial again.
Barofsky’s conclusion: “The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.”
The arrogant politicians and bureaucrats who believe they can regulate around the power of natural market forces and engage in cronyism are, ahem, toxic assets, indeed.
So Barofsky said our financial system is broken, and the editorialist in the very next line somehow twists the meaning of those words and finds away to blame regulators for the misdeeds of banks and stockbrokers.
It's like someone saying, "I can't believe that basketball player pulled out a gun during the game and shot the other team." And the editorialist writing, "Well, the ref failed to pat down all the players, therefore there should be no rules for basketball."
Well caught,Leaf! Our new editor is quite the spin-meister.
Or login with:
New Account