Neil Barofsky on the Ongoing Bailout of Wall Street and the lack Criminal Prosecutions

Welcome to Capital Account. The legacy of the financial crisis and the response from the government is still making headlines. It has turned into a legacy with taxpayers footing the bill and Wall Street paying less for its crimes. Today the SEC charged Wells Fargo’s brokerage firm, as well as a former Vice President, for selling investments tied to Mortgage-Backed Securities without fully understanding their complexity or disclosing the risk to investors. Wells Fargo agreed to settle the charges. However, a fine of $6.5 million, no admission of guilt, and a 6-month suspension of the Vice President sounds like a handslap playing on a broken record. We talk to Neil Barofsky, the man who helped prosecute the CEO and President of Refco, and the watchdog for TARP — the government-sposered bailout of Wall Street.

Neil Barofsky discuses the costs associated with the taxpayer funded bailouts of wall street doled out through tarp and the false promises made under the pretense of bailing out main street. He provides an in-depth account of his experience behind the scenes, as he tried to negotiate what he initially believed, was a program designed to save main street, but that he later discovered was really created with the full intention of bailing out wall street. That man is Neil Barofsky, the former Special Inspector General for TARP and author of “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.”

Also, Bloomberg reports that Russell Wasendorf Sr., the CEO of the bankrupt Peregrine Financial Group, was indicted on 31 counts for making false statements to regulators. We ask Neil Barofsky if, even without blatant confessions of guilt, there are legitimate criminal cases that could be built around executives at major firms. He cites the LIBOR scandal as the most current, and most obvious example of an opportunity for criminal charges and prosecutions to be filed by authorities.

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