Neil Barofsky can be forgiven a little posturing. Early on in his short stint as Special Inspector General for TARP — the bank bailouts — he realized that he had no choice but to set aside bureaucratic caution and seize the mantle of whistleblower and reformer.
Barofsky, who before receiving an appointment from the Bush administration had spent his career prosecuting mortgage fraudsters and drug runners, makes it clear he didn’t set out to rock the boat. It was only after he realized how completely Wall Street had captured the regulatory system in Washington that he discerned that there would be no way for him to fulfill his oversight role without being harshly critical of the establishment.
A Democrat, Barofsky is as unsparing of the Obama administration for its handling of TARP as he is of the Bush team. He faults Bush appointees, including Treasury secretary Hank Paulson and TARP "czar" Neel Kashkari (both alumni of Goldman Sachs), for ladling out hundreds of billions of dollars to Wall Street banks and automakers without concern for the interests of taxpayers or consumers. But Barofsky takes special care to document the failures of current Treasury Secretary Tim Geithner in his mismanagement of the bank bailouts, his bungled administration of a program to help distressed homeowners, and his role in deforming the Dodd-Frank Act.
Barofsky’s everyman account of the pervasive cynicism and insider-dealing of the D.C. establishment is the key toBailout.The book isn’t intended to be a comprehensive narrative of the crisis and bailouts. Barofsky gives only a cursory explanation of the banking sector’s collapse. He doesn’t ever fully engage with the best arguments in favor of TARP, especially the broader case that TARP, whatever its shortcomings, prevented the country from entering a second Great Depression. Nor does Barofsky devote much space to the strongest counterarguments to that claim.
Instead, Barofsky focuses on reporting the shortcomings of Geithner et al. Barofsky claims to have been surprised by the self-interestedness he encountered, and readers of his book surely will be as well. He depicts government officials as, apart from a handful of constantly thwarted good guys, devoted to sharing taxpayers’ spoils with friends.