TARP watchdog says Washington favors Wall Street over Main Street
NBC's Lisa Myers reports on a new book by Neil Barofsky, the watchdog who oversaw the controversial $700 billion bank bailout known as TARP. He claims TARP was much more about taking care of Wall Street, than helping Main Street.
Neil Barofsky was hired by Congress and President George W. Bush to serve as a watchdog over the $700 billion Troubled Asset Relief Program.
Nearly four years later, he’s out with a tell-all book that accuses Washington of using the financial industry rescue package to serve the interests of Wall Street instead of focusing on helping regular Americans.
Barofsky sat down with NBC’s Lisa Myers to discuss the book, “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.”
Barofsky tells Myers he hopes the book gets the public mad.
“I want them to understand that we have a real problem in this country in regulatory capture. And we have a real problem with the influence of the banks on Washington. And that we are headed towards another financial crisis unless we do something to deal with it,” he said.
Barofsky went on to say that although the TARP program helped prevent financial Armageddon, it failed in other ways.
“Treasury promised when that bill was passed that it was going to do more than just throw hundreds of billions of dollars at banks, fill in some holes and preserve the broken status quo," he said. "It was going to restore the economy. It was gonna restore lending. It was gonna preserve homeownership. And all of those goals, all those promises, were abandoned through really poor policy decisions. So, in those aspects it's a failure."
Neil Barofsky, the inspector general in charge of the massive bank bailout is out with a controversial new book, in which he claims the bailout was about helping the banks' bottom line, and not about helping Americans struggling with foreclosures.
Former Citigroup CEO Weill: Break up the banks
Sanford Weill, former chairman and CEO of Citigroup, appeared on CNBC Wednesday.
Sandy Weill, the former Citigroup chairman and CEO credited with building the bank into a financial superpower, now says big banks should be split up.
In a wide-ranging CNBC interview, Weill suggested investment banks should be split from banks that provide retail and commercial banking services.
That’s an unusual outlook from Weill, who pushed the government to overturn the Glass-Steagall law that requires deposit-taking institutions to separate from risky investment banks.
The law was put in place after the 1929 stock market crash.
Citigroup became one of the nation’s problems during the financial crisis -- a poster-child for “too big to fail” with the government spending $45 billion trying to keep it afloat.
“Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail,” Weill told CNBC.
He called for a “creative” banking system that can “attract the best and brightest” talent.
“I want to see the United States be leader,” Weill said. “I really believe in our country, and we are not going to be a leader if we continue to trash our institutions.”
Weill said he came to his view about banks after seeing the public, regulators and politicians turn against the banking industry.
The world hates bankers right now, he said.
“There is such a feeling among people, among regulators, among the political system all over the world against the banking system, and I don't think that is going to change so soon,” Weill said.
Sheila Bair, the former chair of the FDIC, said Weill’s reason for breaking up the banks is not the correct approach to the problem.
“Banks are unpopular now because they’ve done a lot of dumb things,” she told CNBC. There’s a perception that banks are managed for short-term profit and don’t care about long-term customer relations, she added.
“We had to bail out these financial institutions,” Bair continued. “Not all of them, but Citigroup is top of the list.”
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