Obama Helps Hide Bailout Ripoff Secrets

[Truth2Tell]

Greenwald lays out some of the goods on the ongoing Bailout Scam in the context of Obama admin efforts to neuter the TARP watchdog...

http://www.salon.com/opinion/greenwald/">The war being waged on the TARP watchdog's independence

Glenn Greenwald
Sunday July 26, 2009

Neil Barofsky, the chief watchdog over the $700 billion TARP bank bailout program, is one of those rare creatures in Washington: he takes very seriously his responsibilities of independent oversight and accountability. A career prosecutor, Barofsky is a life-long Democrat who donated money to Obama's presidential campaign. But ever since he was appointed to head the oversight office created by Congress when it enacted TARP -- an office designed to ensure transparency and accountability at the Treasury Department and in the banking industry -- he has repeatedly clashed with Obama's Treasury officials over their lack of transparency in how the trillions of dollars in TARP-related funds are being sent to and used by the banking industry. So seriously does Barofsky take his oversight duties that, as a Washington Post profile noted in March, "he refuses to eat with senior administration officials in the building's executive dining room to maintain his independence."

Barofksy's clashes with administration officials have intensified of late. Last week, he issued a report documenting that the actual amount of taxpayer money theoretically put at risk in the bank bailout -- once Federal Reserve, FDIC and other programs are counted -- is $23.7 trillion, not the widely cited figure of $700 billion, a report that prompted attacks from the White House and Treasury on his credibility. Separately, Barofsky has continuously disputed White House claims that it's impossible to account for what has been done by banks with the TARP funds. Barofsky wants to compel banks to account for those funds and then publicize that information, while the administration opposes such efforts, claiming that accounting for TARP monies is impossible due to the "fungibility" of those funds. To disprove that claim, Barofsky sent out voluntary surveys to the bank which proved that those funds could be tracked (and he found TARP funds were being used by receiving banks largely to acquire other institutions and/or create "capital cushions" rather than increase lending activity, the principal justification for TARP).

Most significant of all, and obviously due to Barofsky's truly independent oversight efforts, the Obama administration is now attempting to induce the Justice Department to issue a ruling that Barofsky's office is not independent at all -- but rather, is subject to, and under the supervision of, the authority of Treasury Secretary Tim Geithner. By design, such a ruling would completely gut Barofsky's ability to compel transparency and exercise real oversight over how Treasury is administering TARP, since it would make him subordinate to one of the very officials whose actions Congress wanted him to oversee: the Treasury Secretary's. Barofsky has, quite rightly, protested the administration's efforts to destroy his independence, and has done so with increasing assertiveness as the administration's war on his oversight activities has increased. Why would an administration vowing a New Era of Transparency wage war on a watchdog whose only mission is to ensure transparency and accountability in these massive financial programs?

It should take little effort to explain the significance of these clashes. The amount of taxpayer money transferred to the banking industry or otherwise put at risk for its benefit is astronomical. Professor Nouriel Roubini argues in a New York Times Op-Ed today that actions by the Federal Reserve over the last nine months helped avert a Depression, while former Governor Eliot Spitzer said this week that the Fed has turned into a "Ponzi scheme" that relies on insider dealing and requires vastly increased scrutiny. Those claims aren't mutually exclusive. It's not surprising that transferring extraordinary sums of taxpayer money to a particular industry will help that industry avoid collapse, but it is still the case that the potential for extreme corruption and even theft in such transactions is enormous (indeed, even Roubini argues that Fed Chairman Ben Bernake played an important role in enabling the crisis in the first place). No matter one's views of the wisdom of the bailout and related programs, transparency, accountability and independent oversight are absolutely vital, and that is what Barosksy's office was created to ensure (though it's unlikely -- given how Washington works -- that Congress actually expected that the person in charge of that office would take those duties seriously and be willing to fight with senior administration officials to protect his independence).

http://www.salon.com/opinion/greenwald/">Continued...

edit: broken link fixed

[Buzz Clik]

1. Please clarify: what secrets did Obama personally help to hide and how?

[grantcart]

3. Here is the President's response from the presser which didn't make the OP

And the last question with respect to TARP. Let me take a look at what exactly they say we have not provided. I think that we've provided much greater transparency than existed prior to our administration coming in. It is a big program. I don't know exactly what's been requested. I'll find out and I will have an answer for you.

http://www.talkingpointsmemo.com/livewire/2009/07/transcript-of-obamas-press-conference-july-22-2009.php

[Truth2Tell]

4. I hold Obama responsible for Geithner's obstruction.

He is the boss. What his administration does is fully his responsibility.

[Buzz Clik]

6. So, Obama didn't really hide anything You simply don't like Geithner, and Obama hired him.

Yet another bullshit title.

Congrats.

[Truth2Tell]

10. Do you not hold him responsible

for what his apointees do? Are you suggesting they are out of his control? Where do you think the buck stops? You think it's just Geithner ripping us off and hiding what he's doing? You think Obama has no control over it? Really?

[denem]

2. Yes, please outline Obama's involvement.

[Truth2Tell]

5. Let's start with the DOJs efforts

to remove the Watchdog's independence:

http://blogs.abcnews.com/politicalpunch/2009/06/bailout-watchdog-defends-independence-from-treasury.html

It's no secret (and really not much in dispute) that the Watchdog and the admin have been fighting over transparency. And yes, that OBAMA's DOJ arguing AGAINST the transparency.

[dionysus]

7. not working out like you hoped, is it?

:rofl:

[Truth2Tell]

14. You mean this thread? Or the Great Hope Express? nt

[HamdenRice]

8. For lines like "trillions of dollars in TARP-related funds" and "$23 trillion" he lost credibility

There are not "trillions" of TARP related funds. TARP was $700 billion. There are various guarantees and loans in other programs mostly run from the Fed.

Barosksy had to admit the absurdity of the $23 trillion number a few days later on the front page of the NY Times.

Just to show you how absurd that number is, one of the Fed's biggest programs was to "swap" currencies with the European Central Bank, the Bank of England and the Japanese Central Bank, to the tune of several trillion.

For that money to become an actual expenditure two things would have to happen with respect to each bank -- they would have to go bankrupt and their national currency would have to become worthless.

All mortgages would have to default and all real estate in the US would have to have zero value. Every bank account and money market account would have to become worthless.

The article also is misleading about Professor Nouriel Roubini's op-ed. Professor Roubini, the doomers' favorite economist, wrote an op-ed saying that Bernanke had been extremely successful in averting a great depression and should be re-appointed as Fed chair.

[LiberalAndProud]

9. Yes, that calls the veracity of the entire article into question.

Somebody (could be plural) has an agenda here.

[Truth2Tell]

11. Barosky didn't "admit the absurdity"

of the $23 trillion number. The New York Times characterized it as such, not Barosky. I'm amazed that you would make such a lame attack on a courageous Gov. employee trying to shed some light on this Wall Satreet ripoff.

It really doesn't matter whether (to use your most extreme example) the currency swaps were technically considered "expenditures." The fact is that these were transactions that have the potential to generate large net losses or gains for the Fed (and hence deeply affect every one of us who holds Dollars). As such, these transactions should be subject to outside review. Clearly Geithner (and Obama) don't want that type of transparency. That's the bottom line. Nit pick all you like, the fact remains that Treasury - OBAMA'S Treasury - is no more interested in accountability and transparency now that it was during the Bush years. Sad but true.

The only "agenda" I see at work around here is the blind defense of a Democratic President, even when he behaves in ways that many wouldn't have dreamed tolerate from Chimpy. Pathetic.

[Ikonoklast]

12. Unrec for deliberate mislead.

No truth, and nothing to tell.

[Truth2Tell]

13. Thanks for the kick. nt