Saturday, 8 September 2012

Soaring back to earth

An excellent antidote for the hallucinations and mirages induced by the Democrats’ convention last week was the book Bailout: An Inside Account of How Washington Abandoned Main Street while Rescuing Wall Street, which I read simultaneously. The author is Neil Barofsky, former Inspector General of the Treasury’s Troubled Assets Relief Program (TARP), which was established to take a planeload of toxic assets off the banks’ balance sheets and thereby save their undeserving hides during their 2008 near-death experience.

Barofsky’s job was to oversee the execution of TARP, which even before he came on board in the late Bush Administration was shoveling tens of billions of taxpayer dollars out the door with few if any controls. You’d think all the moaning and gnashing of teeth about irresponsible government spending would mean that Barofsky would enjoy a golden throne from which to ensure fair play, efficiency and honesty.

You would, of course, be wrong. While everyone had to pretend to care about those things, the real motivation of TARP was to hoover up as many billions as could be found and mainline them into the rickety banks’ track-marked veins while they struggled back toward solvency. In this mission, Democrats and Republicans, Bushites and Obamanians, were in full accord. Barosky was promptly exiled to a dank basement in the Treasury’s dungeon and blocked at every turn by bureaucrats determined to undermine him, first by Bush appointees and then by the Geithner team. Only certain much-maligned members of Congress were willing to back Barofsky’s quixotic efforts.

One of many examples will suffice, especially given the repeated references to it during the Democratic sales pitch just ended: the auto bailout. Barofsky didn’t have any problem with the provision of emergency aid to Detroit automakers, but he did try to insist on a fair accounting of the disbursed cash and justification for its attendant policies, such as the decision to close thousands of auto dealerships and throw thousands out of work in the midst of a deep recession. Barofsky found that there was no credible justification for the rush to dismantle the dealerships, and he dared to say so, drawing heated fire, lies, and nasty leaks from the White House.

It’s important to keep this perspective when listening to Bill Clinton and Joe Biden sing the praises of themselves as defenders of the common folk: when the Democrats held huge margins in Congress and occupied the White House, they poured money into the car companies without a second thought about tens of thousands of jobs that could easily have been preserved. Instead, their corporate geniuses (like Steve Rattner, the New York property developer who ran the auto bailout) took advantage of the bankruptcy crisis to break contracts and screw small business owners.

Barofsky comes back to this theme repeatedly in his book: the excessively bank-friendly choices and rushed decisions by Geithner and in the end Obama himself eventually backfired politically and harmed the Democrats’ image among the general populace.

In fact, he accuses Geithner of pretty much giving birth to the Tea Party through the poorly designed and hastily executed HAMP program that was supposed to help people refinance their underwater mortgages (and instead caused them vast suffering, including to people who were not even delinquent).
When Geithner dismissed all criticism and pushed the ill-conceived program into operation, the famous Rick Santelli rant on the floor of the Chicago Mercantile Exchange followed, sparking the reactionary movement that cost Democrats dearly in the mid-term elections.

Does this mean there is no difference between the two parties and that I’m saying we should placidly await fascism? That’s another straw-man argument unworthy of response. While the corruption is vast and deep all around, the Republican half of the duopoly also includes serious mental derangement, which is no small matter when it sets in among the powerful. But it’s a fantasy to think that the people we just heard filling their pie-holes with solidarity for the masses are going to defend us. When Obama returns for a second term, the impoverishment of the middle and working classes will accelerate.


Anonymous said...

wow...I am sending this to my friends and posting it as a must. W

Anonymous said...

Thanks turning readers on to this book!