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.