Crisis Mismanagement | How America Bailed Out The Banks Rather Than Its Citizens

Crisis Mismanagement | How America Bailed Out The Banks Rather Than Its Citizens

IN JULY 2008 the Federal Deposit Insurance Corporation (FDIC) closed IndyMac, a Californian lender. Anyone who had more than $100,000 in savings suffered heavy losses, including a woman who had just deposited her son’s life- insurance benefits after he was killed in Afghanistan. Later that year the government insisted that derivatives contracts sold by AIG, the failed insurer, would be honoured at a cost of tens of billions of taxpayers’ dollars.

Is the government too deferential to the concerns of the big banks and insufficiently attentive to the needs of ordinary people? Yes, according to two new books: “Bailout” by Neil Barofsky and Sheila Bair’s “Bull by the Horns”. Both accounts correct other, more triumphalist histories of the financial crisis, such as David Wessel’s “In Fed We Trust”, which came out in 2009.

Mr Barofsky was asked to serve as the Special Inspector General for the Troubled Asset Relief Program (TARP) by the outgoing Bush administration. He was an inspired choice, a tough New York prosecutor who had led fraud cases against futures brokers that hid losses and predatory mortgage lenders. Earlier in his career, Mr Barofsky charged dozens of Colombian Marxist guerrillas, narrowly avoiding assassination in Bogotá. But he was not interested in leaving a job he loved to fight turf-obsessed bureaucrats. Mr Barofsky accepted the assignment only after his boss made an earthy appeal to his sense of patriotism: “Who else is going to protect the public from what could be a $700 billion clusterfuck of fraud?”

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4closureFraud.org

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One Response to “Crisis Mismanagement | How America Bailed Out The Banks Rather Than Its Citizens”
  1. Bill Paatalo says:

    Last paragraph – “Oddly for a financial expert, Ms Bair repeatedly writes that banks “hold” equity when they actually sell it to investors.”

    Folks, this is what happened with all of the WaMu securitized loans. WaMu sold the loans to the trusts but never delivered the goods. This is why Chase takes the contradictory position that it retained WaMu’s servicing rights AND acquired the assets as part of the PAA. Can’t have it both ways. The OTS and FDIC could not sell to Chase that which WaMu DID NOT OWN!

    Bill Paatalo
    Private Investigator
    BP Investigative Agency

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