ON DECEMBER 8, 2008, NEIL BAROFSKY WAS CONFIRMED AS TROUBLED ASSET PROGRAM (TARP) WATCHDOG. SEVEN MONTHS LATER HE ESTIMATED THAT THE $700 BILLION BAILOUT COULD BALOON TO $23.7 TRILLION! ACCOUNTABILITY WASN'T MANDATED BY TARP. INSTEAD OF LENDING TO STRUGGLING AMERICAN BUSINESSES, THE TOO-BIG-TO-FAIL BANKS WERE HOARDING OR USING THE MONEY FOR SPECULATIVE INVESTING. BAROFSKY HAD NO ENFORECEMENT POWER. MILLIONS OF HOME OWNERS WERE DEFRAUDED. GEITHNER BEARS FULL RESPONSIBILITY. ORDINARY PEOPLE WERE SOLD OUT AND LIED TO. WALL STREET CRIMINALS POCKETED THE BAILOUT MONIES AND PASSED THE BILL TO THE TAXPAYERS.

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September 21, 2012 at 01:38:05

Promoted to Headline (H3) on 9/21/12:     Permalink


Bailout Fraud and Unaccountability

By Stephen Lendman (about the author)

opednews.com


Bailout Fraud and Unaccountability
TARP watchdog exposes fraud.

by Stephen Lendman

On December 8, 2008, the Senate confirmed Neil Barofsky's nomination as Troubled Asset Relief Program (TARP) watchdog. He assumed the post of SIGTARP (Special Inspector General for TARP).

On July 20, 2009, he estimated the $700 billion bailout fund could balloon to $23.7 trillion. Obama administration secrecy conceals what's essential to reveal. Over $9 trillion is known. Some analysts think true figures may be three times that amount. Only crooked bankers and corrupt bureaucrats know for sure.

In February 2009, Barofsky submitted an initial report to Congress. In the past two months, he said, Washington handed out hundreds of billions of dollars (like confetti) to troubled financial institutions.

Where did the money go, he asked? What assurances exist that it's not stolen or wasted?

TARP didn't require recipients to report or internally track funds used. Accountability wasn't mandated. Banks took full advantage. Instead of loans to stimulate recovery, they hoarded cash, acquired other financial institutions, paid off debt, speculated, and knew then and now there's plenty more help for the asking.

Fraud prevention standards weren't imposed. Barofsky doubts the program's longterm success.

On March 29, 2011, he headlined a New York Times op-ed "Where the Bailout Went Wrong," saying:

Two and a half years after legislation passed, Obama officials declared mission accomplished. "On my last day as the special inspector general".I regret to say that I strongly disagree."

TARP and what followed struck out. It "failed to meet some of its  most important goals." Main Street was sacrificed for  Wall Street.

Congress was told TARP funds would buy up to $700 billion of mortgages. Authorizing legislation (the Emergency Economic Stabilization Act - EESA) emphasized preserving homeownership.

Treasury officials promised help. EESA mandated it. Struggling homeowners got none. Legislative provisions were violated. Treasury changed the rules. Money went to banks with no accountability or mandate to extend credit.

"There were no strings attached: no requirement or even incentive to increase lending to home buyers, and against our strong recommendation, not even a request that banks report how they used TARP funds."

Instead of increased lending, it declined. As inspector general, Barofsky had no enforcement power. He could only recommend. Suggested policies fell on deaf ears. Treasury and Wall Street conspired to commit grand theft. Ordinary people were hung out to dry and scammed.

Helping homeowners was shelved. The Home Affordable Modification Program (HAMP) was introduced. Obama promised four million families help. The program was "a colossal failure."

It was designed to fail. Its provisions included no accountability. Guidelines only were provided. Banks and other mortgage services ignored them. Foreclosures mounted. Millions of homeowners were defrauded. Nothing changed to this day.

One of HAMP's most pernicious abuses was letting servicers "direct borrowers who were current on their mortgages to start skipping payments, telling them that that would allow them to qualify for a HAMP modification," said Barofsky. "Homeowners who might have been able to ride out the crisis instead ended up in long trial modifications, after which servicers would deny them a permanent modification and send them an enormous 'deficiency' bill." "Borrowers who might otherwise never have missed a payment found themselves hit with whopping bills that they couldn't pay and now faced foreclosure. It was a disaster."

Geithner bears full responsibility. Understating problems, he admitted solutions "won't come close" to expectations. He refused to address glaring shortfalls. He abandoned Main Street for Wall Street. He's complicit in grand theft. He and banker cronies belong in prison.

Banks know they can steal with impunity. They're larger and more powerful now than when crisis conditions erupted. They can speculate recklessly. They'll be bailed whenever they get in trouble.

Treasury "ignore(d) rather than support(ed) real" reforms. Its "broken promises" turned TARP and other programs into a giant Wall Street "giveaway."

Its "mismanagement" and criminal complicity "damaged the credibility of the government"." Conditions are so out of control that future policy makers may be unable "to save the system the next time a crisis arises."

Perhaps that's TARP's "most lasting, and unfortunate, legacy."

Barofsky's new book "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street" explains. 

Writer/Roosevelt Institute fellow Matthew Stoller calls it "a very important" account of the financial crisis aftermath. In April 2010, Barofsky met a key adversary.

Herbert Allison formerly headed Merrill Lynch, TIAA-CREF and Fannie Mae. He came out of retirement to oversee TARP. He became Assistant Treasury Secretary for Financial Stability.

"Have you thought at all about what you'll be doing next," he asked. "Out there in the market, there are consequences for some of the things you're saying and the way you're saying them."

Barofsky knew he was being threatened "with lifelong unemployment." Going along instead of bucking the system assures revolving door plum positions. "It was gold or the lead," he explained.

Cooperate and get rich. Don't and lose out. At first, he "had no idea that the US government had been captured by" bankers. He was "shocked (at) how much control" they have over policy on their own terms. Treasury goes along deferentially. Republicans or Democrats agree on core issues.

He was hijacked and hamstrung. Too big to fail constitutes near omnipotence. Whatever Wall Street wants it gets. Contesting its power is futile.

Stoller calls "Bailout" an account of "the importance of Congressional oversight in reigning in corruption, and the problems of our imperial Presidency."

Barofsky hoped for press and congressional attention. "Our message was simple," he said. "Treasury's desperate attempt to bail out Wall Street was setting the country up for potentially catastrophic losses."

Throughout his tenure, he was obstructed. He faced road blocks, ambushes, trench warfare, and threats in trying to do his job.

On arrival at Treasury, he saw ornate large offices given top officials. He got a small, foul-smelling basement one with barred windows. He spent most of the next three years there. He wasn't welcome unless he played ball. It's not his style and he refused.

He explained what he saw graphically. Homeowners were abandoned and scammed. A tsunami of evictions, foreclosures, fraud, mortgage document robo-signings, blighted neighborhoods, and homelessness continues without relief.

Taxpayers got the bill. Bankers got benefits. So did lobbyists and go-along politicians. The combination of Treasury criminality, White House complicity, congressional laxity, and regulatory failure keeps the dirty game going.

Since crisis conditions erupted five years ago, ordinary people were sold out and lied to. Obama exceeded the worst Bush administration policies. Political corruption is rampant.

Barofsky's best efforts failed. Attempts to achieve accountability, transparency, controls, and consumer protections proved no match for entrenched bureaucratic power, privilege and complicity with Wall Street.

He issued numerous reports. Geithner and other Obama officials buried them. Media scoundrels largely ignored them.

Barofsky believes Geithner, complicit officials, and Wall Street crooks should be fired and prosecuted. Don't expect it as long as criminals run America.

Five years after crisis conditions erupted, no top Wall Street or government official faced charges. Unaccountability is institutionalized. An eventual greater crisis looms. Unresolved problems assure it. When is anyone's guess.


Stephen Lendman lives in Chicago and can be reached at Email address removed .

His new book is titled "How Wall Street Fleeces America: Privatized Banking, Government Collusion and Class War"

http://www.claritypress.com/Lendman.html

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I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

Paul Krugman, Winner of the 2008 Nobel Prize in Economic Sciences, Tells Obama What He Must Do – and Do Soon – to Avert a Depression

(Photo: Jeff Zelevansky / Getty)

In the 22 January 2009 issue of Rolling Stone, Paul Krugman writes “What Obama Must Do – A Letter to the New President.” In it he emphasizes that Obama will face an unprecedented economic crisis that is “worse than almost anyone imagined” and will grow still worse unless and until adequate measures are taken to combat it. Primary among those measures is to put Americans back to work. Under Bush from 2001 through 2007 job growth was insufficient to keep pace with population growth, resulting in 1.5 to 2 million additional unemployed. Then in 2008 alone 2 million jobs were lost outright. Krugman asserts that “There's nothing in either the data or the underlying situation to suggest that the plunge in employment will slow anytime soon, which means that by late this year we could be 10 million or more jobs short of where we should be.” (snip) “Add in those who aren't counted in the standard rate because they've given up looking for work, plus those forced to take part-time jobs when they want to work full-time, and we're probably looking at a real-world unemployment rate of around 15 percent — more than 20 million Americans frustrated in their efforts to find work.” (snip) “As many as 10 million middle-class Americans would be pushed into poverty, and another 6 million would be pushed into 'deep poverty'...”

Because 75% of our Gross Domestic Product (GDP) is due to American consumers consuming, growing impoverishment of the middle class is the single most important factor that must be reversed, and reversed fast, if we are to have any hope of avoiding another great depression. And Krugman explains why the burden of reversing this trend now falls squarely on the shoulders of the new president (because “the FED has lost its mojo”) and how much it will cost (likely double Obama’s present plan in the short run, and more in the long run).

Required reading, folks!

U.S. Headed the Way of Iceland, while Paulson Steals Our Safety Net

Iceland’s economic collapse (see below) was due to most of the same forces that presently menace the U.S.: huge budget and trade deficits added to the “world banking crisis,” which comprises the attempted unwinding of a mega-Ponzi scheme (far larger than the sub-prime bubble) involving unregulated inter-bank insurance policies called Credit Default Swaps (CDS), which originally amounted to $45 TRILLION but which will rise to around $500 Trillion(!) when the unregulated trading in these CDS is taken into account:

http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid={B9E54A5D-4796-4D0D-AC9E-D9124B59D436}

Just the $45 Trillion alone is approximately equal to the Gross Domestic Products (GDP) of the entire world combined!

Meanwhile, the average American is in debt up to his/her keister, while Americans’ real wages are falling and jobs (particularly good ones) are rapidly drying up. Since 75% of the U.S. GDP derives from consumer spending (counting 5% due to residential home sales), it is inevitable that the U.S. GDP will now contract rapidly. When this contraction is recognized by the rest of the world as irreversible, there will be a rapid sell-off of dollars eventually crashing the greenback – exactly the same thing that just happened to the Icelandic krona. My guess is that the dollar will fall by at least 50% from its present value in the not-too-distant future and won’t bounce back in my lifetime. Consequently, those of us with incomes and savings denominated in American dollars will find the prices of imported goods (presently comprising most of our non-food purchases) to double overnight!

At least we Americans still have a safety net in Social Security, Medicare, U.S. Government pensions, and the U.S. Pension Benefit Guaranty Corporation (PBGC). Or do we?

In fact, the PGBC has exhausted its entire $8 billion surplus as a result of a series of big corporate bankruptcies last year: http://www.wsws.org/articles/2003/jan2003/pens-j29.shtml ). Meanwhile, Henry Paulson (former Goldman Sachs top fox) is now giving away what’s left of our protective “chicken coop” to the very foxes responsible for the unfolding economic disaster! Moreover, he asserts that the government must now address Bush’s deficits by pursuing "policies that promote economic growth and fiscal responsibility, and address entitlement reform” – translation: cut our Social Security, Medicare, etc. (see below).

Quoting Naomi Klein (in last article below): “If this final looting is not stopped (and yes, there is still time), we can forget about Obama making good on the more progressive aspects of his campaign platform, let alone the hope that he will offer the country some kind of grand Green New Deal.”

What there is “still time” for us to do is to demand that Obama – and more immediately the damn Congress – stop the giveaway to the perps and instead inject that fraction of that $700 billion that is greater than what Warren Buffet would pay for the banks' shares directly into the economy, particularly for mortgage relief for those facing foreclosure and job creation in the areas of developing cheap non-polluting energy sources and other new green technologies and rebuilding our crumbling infrastructure (for example, our interstate highways are in disrepair, our bridges are falling down, and our passenger trains are absolutely pathetic compared to the energy-efficient fast trains of Western Europe and Japan).

Make your voice heard. The time is growing short.

http://www.nytimes.com/2008/11/09/world/europe/09iceland.html?pagewanted=1&_r=1&hp

Stunned Icelanders Struggle After Economy’s Fall

By SARAH LYALL

New York Times

Published: November 8, 2008

REYKJAVIK, Iceland — The collapse came so fast it seemed unreal, impossible. One woman here compared it to being hit by a train. Another said she felt as if she were watching it through a window. Another said, “It feels like you’ve been put in a prison, and you don’t know what you did wrong.”

This country, as modern and sophisticated as it is geographically isolated, still seems to be in shock. But if the events of last month — the failure of Iceland’s banks; the plummeting of its currency; the first wave of layoffs; the loss of reputation abroad — felt like a bad dream, Iceland has now awakened to find that it is all coming true. ...(Go to link above for more.)

http://www.thenation.com/doc/20081110/greider2?rel=rightsideaccordian

Paulson's Swindle Revealed

By William Greider

The Nation

October 29, 2008

The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return. ...(Go to link above for more.)

http://www.rollingstone.com/politics/story/24012700/the_new_trough

The New Trough

The Wall Street bailout looks a lot like Iraq — a "free-fraud zone" where private contractors cash in on the mess they helped create

NAOMI KLEIN

RollingStone

Posted Nov 13, 2008 12:00 AM (amended to reflect developments)

... After years of corruption born of no-bid contracts and paltry oversight, many Iraqis are still waiting for the lights to come back on. Today, a new team of contractors is lining up to reconstruct the U.S. economy — reconstruct it from the mess made by the very banks, brokers and law firms that are now applying for contracts. And it's not at all clear that America can survive their assistance. ...

... Secretary Paulson promised that the banks won't just "hoard" the money — they will quickly "deploy it" through the economy in the form of badly needed loans. There is just one hitch: Neither Paulson nor [the private company hired to perform the bailout] got that "deploy" part in writing — nor did they put in place any mechanism to require the banks to spend their taxpayer billions. Apparently, the part about lending the money to homeowners and small businesses was sort of implied. ...

... Shortly after receiving the contract [to disburse $700 billion in taxpayer money], [the president of the bank that won the contract] told investors that his institution is now well-positioned to profit from the market meltdown. "There's a lot of new business that's going on even in this chaotic marketplace," he said, "and so some of those things have been very positive to us."...

... On the same day that he allocated the first $125 billion to the banks, Secretary Paulson announced the largest federal budget deficit in U.S. history. Buried in his statement was a preview of the next phase of the financial disaster. The deficit numbers, he declared, reinforce the need to "pursue policies that promote economic growth and fiscal responsibility, and address entitlement reform." He was referring to Americans who feel entitled to receive Social Security in their old age and Medicaid when they are sick. Those programs, Paulson implied, might not be able to survive the budget crisis he is currently creating for the next administration. ...

(Go to link above for more.)

http://www.naomiklein.org/articles/2008/11/real-change-depends-stopping-bailout-profiteers

Real Change Depends on Stopping the Bailout Profiteers

By Naomi Klein - November 4th, 2008

Huffington Post

... [Obama’s] first order of business—and one that cannot wait until inauguration—must be halting the robbery-in-progress known as the “economic bailout.” I have spent the past month examining the loopholes and conflicts of interest embedded in the U.S. Treasury Department’s plans. The results of that research can be found in a just published feature article in Rolling Stone, The Bailout Profiteers, as well as my most recent Nation column, Bush’s Final Pillage.

Both these pieces argue that the $700-billion “rescue plan” should be regarded as the Bush Administration’s final heist. Not only does it transfer billions of dollars of public wealth into the hands of politically connected corporations (a Bush specialty), but it passes on such an enormous debt burden to the next administration that it will make real investments in green infrastructure and universal health care close to impossible. If this final looting is not stopped (and yes, there is still time), we can forget about Obama making good on the more progressive aspects of his campaign platform, let alone the hope that he will offer the country some kind of grand Green New Deal. ... (Go to link above for more.)

Why Congress Voted for the Bailout ...and More Reasons Why They Shouldn’t Have

Last Friday the House reversed course and voted 263 to 171 to approve the administration’s $700 Billion bailout of Wall Street – despite their constituents being 10 to 20-to-one against it. Why? Well, it seems that the White House made certain threats, including the threat of imposing marshal law! Listen to Rep. Brad Sherman (D-CA) relate this on the House floor (to be non-partisan, I refer you to the web site of Republican presidential candidate Ron Paul). Just 48 seconds:

http://www.ronpaulwarroom.com/?p=14840

Idle threats? One might hope so, but then everyone should be aware of: “Secret Bush Administration Plan to Suspend US Constitution ‘Continuity of Government’ (COG) Provisions activated in 2001” by Tom Burghardt:

http://www.globalresearch.ca/index.php?context=va&aid=10473

In the meantime, FOX News asked Rep. Dennis Kucinich for his views on the bailout. Once again, he “tells it like is” in this 1-and-a-half-minute video:

http://kucinich.us/index.php?option=com_content&task=view&id=2478&Itemid=1_

Finally, those of you with 37 minutes to spare might consider listening to Senator Byron Dorgan on the Senate floor explaining all the reasons why the taxpayer should not want to bailout Wall Street, now or ever!

http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=281384-4

The Impending Economic Chernobyl is the Work of Wall Street Criminals

Subprime isn’t the only problem created by the mortgage lenders. There is also COLATERAL FRAUD, which may be magnifying the problem as much as ten fold. Go here and scroll to Part VIII:

http://news.goldseek.com/GoldSeek/1218694140.php

In addition there is massive CURRENCY INTERVENTION by the U.S. government, which so far has kept the American dollar from falling to the depths it should have by now (ibid, Part IX).

How much is the dollar really worth? Remember the gold standard? Well, I expect that you will be as surprised as I was to learn that it is now VIRTUALLY IMPOSSIBLE TO BUY PHYSICAL GOLD. There is very little available in the market place. Law of supply and demand? The price of gold should be going up, right? Wrong! The price of gold (and gold mining stocks) has been going down, down, down.

http://www.gata.org/node/wallstreetjournal

How do they drive down the price of gold when the supply is zero? Answer: by NAKED SHORT SELLING (“naked” means that the seller hasn’t even borrowed what he is selling). Here is the “smoking gun” proof:

http://news.silverseek.com/TedButler/1219417468.php

What’s more, naked short selling of targeted small companies continues to be extensively practiced at the “retail” level by the mafias and others IN COLLABORATION WITH THE FINANCIAL NEWS MEDIA. Read all about it here:

http://www.deepcapture.com/

When you get to the Deep Capture site, I recommend that you first click “Deep Capture: The Explanation” (second button on the right) and then read Chapters 4 and 7 in that order. They’re not very long. Then, if you are interested enough in the real-life history of massive sales of never-delivered PHANTOM STOCKS and the media complicity/cover up thereof, click the first button “Deep Capture: The Story.” (Warning: This one IS long, although it’s a great read in the style of Tom Clancy but strictly non-fiction).

Finally, lurking at the bottom of the toxic waste dump that has become our economy are the CREDIT DEFAULT SWAPS (CDSs), which are currently estimated to be about $45 TRILLION (more than half of the asset base of the entire global banking system!). However, when one takes into account the TRADING of these CDSs, their notional value balloons to something like half a $QUADRILLION!!!:

http://news.goldseek.com/GoldSeek/1208412360.php

There is not near enough money in the world to bail out the assholes who created this mess. And why would anyone want to?

Be assured that the criminals responsible for this mess have their plans to profit from the mother of all crashes ...in the same manner as they presently profit from their manipulations on a daily basis. I recently discovered the following link, which tells you how the insider specialists do it:

http://bearfactsspecialistreport.com/Specialist%20Information.htm

If you understand their system and mimic what they do, you too will will have a chance to make money in the market. But just be ready to bailout on short notice before the crash arrives ...or better still put yourself into crash-proof equities like the Canadian oil funds (for example, on the NYSE: PWE or PGH or OTC: NOIGF or PMGYF). But if you should take this advice, be prepared to see your fine investments manipulated all the way to the last second...