A call to Occupy: we should listen.
Yesterday a Bloomberg View article was published, written by Neil Barofsky.
In case you don’t remember, Barofsky was the special inspector general of the Troubled Asset Relief Program, which meant he was in charge of watching over TARP until he resigned in February 2011. And if you can judge a man by his enemies, then Barofsky is doing pretty well by being cussed out by Tim Geithner.
The Bloomberg View article was an excerpt from his new book, which comes out July 24th and which I’m going to have to find time to read, because this guy knows what’s going on and the politics behind possible change.
In the article, Barofsky tears through some of the most obvious and ridiculous shenanigans that the Obama administration and the Treasury have been up to in preserving the status quo whereby the banks get bailed out and the average person pays. In order, he obliterates:
- Obama’s HAMP project: “with fewer than 800,000 ongoing permanent modifications as of March 31, 2012, a number that is growing at the glacial pace of just 12,000 per month.”
- The recent mortgage settlement: “In return for what was touted as a $25 billion payout, the 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.” and “As a result, the settlement will actually involve money flowing, once again, from taxpayers to the banks.”
- The recent so-called Task Force for investigating toxic mortgage practices: “it seems unlikely that an 11th-hour task force will result in a proliferation of handcuffs on culpable bankers.”
- The Dodd-Frank Bill: “…the market distortions that flow from the presumption of bailout may have gotten worse. By failing to alter this presumption, Dodd-Frank may have inadvertently sowed the seeds for the next financial crisis.”
- Specifically, the Volcker Rule, where he quotes a milquetoast Geithner: `“We’re going to look at all the concerns expressed by these rules,” he said. “It is my view that we have the capacity to address those concerns.”’ – Barofsky draws a line directly from Geithner to the conclusion of Senator Levin, `“Treasury are willing to weaken the law.”’ Barofsky here highlights out the most basic problem we face, namely that regulators are suckling from their Wall Street masters: “Indeed, words like Geithner’s, when accompanied by actions such as the Fed’s authorization of the largest banks to release capital, send what should be a clear message. We may be in danger of quickly returning to the pre-crisis status quo of inadequately capitalized banks that take outsized risks while being coddled by their over-accommodating regulators. A repeat of the financial crisis would soon be upon us.”
- Finally, he gets on my favorite riff about TARP, namely that it’s not about the money being paid back, it’s about the risk that we’ve taken on as a nation.
But what’s most interesting to me about the article is the fact that he’s not proposing a political solution to the unbelievably unbalanced distribution of resources. Probably this is because the political power is so firmly entrenched and because it is so firmly corrupt that there’s no use barking up that tree. Instead, he is asking for Occupy and other popular movements to step it up. The article ends:
The missteps by Treasury have produced a valuable byproduct: the widespread anger that may contain the only hope for meaningful reform. Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. 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.
Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.
The question I have is, will we need yet another financial crisis to get this done? (Not that I think one is far off- the banning of short selling recently by Spain and Italy is a desperate move, kind of like throwing in the towel and admitting you’d rather openly manipulate markets than let people have honest opinions.)
I for one think we’ve got plenty of evidence right now, and I’m outraged. But maybe not everyone is, and I take responsibility for that.
I think my job now, as an Occupier, is to make sure people understand that these decisions and speeches made at the Treasury and the White House are directly related to people illegally losing their homes and jobs and town services and having their pensions rewritten after they’ve reached retirement age. I absolutely believe that, if people knew all of those connections, we’d have an enormous number of people ready to occupy and the political power to do something.