Bailout, the book
You know that feeling, where you feel like a conspiracy theorist because, even though you don’t have cold hard evidence for it, you have a distinct feeling that someone is trying to thwart you even though they claim to be your friend, or thwart an idea they claim to believe in, or even worse, thwart a principle they claim to stand by?
That’s how I was feeling about Tim Geithner, and frankly the entire Obama administration, until I read “Bailout,” the recently published tell-all book by Neil Barofsky, who was put in charge of detecting and preventing fraud related to TARP.
I recently blogged about how I consider this book a call to Occupy, but I had only read the excerpt from Bloomberg at that point. Now that I’ve read the book, it’s most definitely a call to Occupy, as well as to any group or individual who still has principles and enough energy up to summon outrage.
Going back to the feeling of being a conspiracy theorist.
Nothing in this book was really new to me or really surprised me, except the fact that Barofsky was willing to write it down in black and white. Thank goodness there are still a few people who still have principles, even inside Washington.
Everything there was something I’d pieced together either working in finance, where I lost faith in the Obama administration right away when it introduced HAMP, which was clearly set up to fail homeowners, or by meeting people in the Alternative Banking group of #OWS, specifically Yves Smith, who explained the technical details of the more recent mortgage settlement, and how it is a backdoor bailout to the banks. Yet another one!
Where was the corresponding bailout for the people? Why this doublespeak, where we’d talk about moral hazard for people who have been screwed by the predatory loan industry, but the moral hazard for AIG executives getting multi-million dollar bonuses after an $85 billion bailout is just something we have to swallow, out of deference to the sanctity of contract?
And if we care so much about contracts, why do we allow companies to enter bankruptcy just to jettison pension promises but we don’t allow individuals (who are not too-big-to-fail) to renegotiate crippling student debt loads?
I’m confused no longer. It was never Geithner’s intention, or Obama’s intention, to help out the people. It has always been their intention solely to prop up a failed banking system. What they’ve been doing, rather than saying, is much more consistent with this theory anyway. Lots of roundabout efforts to explain why they’d set up a mortgage modification system to help homeowners was completely ineffective; it’s because it was actually set up to slow down foreclosures in order to “foam the runway” for banks to get back into the black. That makes much more sense!
It actually restores my faith in the Obama administration a bit. Before this I was sometimes torn between thinking they were bought by the banks or they were utterly incompetent. But now I know they aren’t entirely incompetent in the follow-through with their goals: they actually did succeed in slavishly working for the banks in the name of helping out homeowners.
Thank you, Neil Barofsky, for a great book. Thank you for maintaining your justified anger and for being courageous enough, and enough of a dick, to write it.