In his weekly “Stories I’d like to see” column, journalist and entrepreneur Steven Brill spotlights topics that, in his opinion, have received insufficient media attention. This article was originally published on Reuters.com.
1. The Obama TARP fiasco Romney can’t use:
If the dynamics of the presidential campaign were different, a book called Bailout by Neil Barofsky would be getting a lot more attention. Barofsky left a post in late 2008 as a top federal financial fraud prosecutor in New York to become the special inspector general overseeing the $700 billion TARP bailout program. He’s written a Mr. Smith-Goes-to-Washington-like account of how even after TARP was turned over to a Democratic administration - in fact more so after the Democrats took over - TARP money was dispensed and TARP rules were written almost completely for the benefit of the bankers who drove America into a ditch.
For example, there’s Barofsky’s blow-by-blow description of how the rules written by the Obama administration for its much-heralded $50 billion program to help homeowners whose mortgages were underwater were so tilted in favor of the banks and against homeowners actually being able to get relief that only $1.4 billion of the $50 billion was dispensed, with few homeowners getting any help. And Barofsky is not writing about compromises the Obama administration had to make with banker-sympathetic Republicans in Congress; this is all about internal decisions that unfailingly seemed to put the needs and mindset of Wall Street above those of Main Street consumers.
A presidential campaign that wanted to call out the Obama administration for being too friendly to Wall Street and the banks at the expense of Main Street would be using Bailout as the cheat sheet that keeps on giving. But with the Romney campaign’s attack coming from the opposite direction - that the president and his team have killed the economy by shackling Wall Street - and with Romney on record in favor of allowing the mortgage crisis to “bottom out” with no government intervention, the former Massachusetts governor and his team have no use for Bailout.
That doesn’t mean reporters covering Wall Street and financial regulation shouldn’t be digging in, if not now, then after the voting. I want to read a story challenging officials, such as Treasury Secretary Timothy Geithner, to offer their response to Barofsky’s detailed and convincing indictment.
Did Geithner really refuse repeatedly to meet with Barofsky and try time and again to torpedo his investigations into fraud at TARP or his efforts to write rules that would prevent fraud? Did the Obama White House and the Treasury Department really argue to Barofsky that implementing what seem to me to be commonsense reporting and auditing rules for those accepting TARP money would scare off the banks from taking these handouts?
Did both the White House and Treasury constantly try to undercut their inspector general with leaks to the press portraying him as an ambitious partisan, when in fact he is a Democrat and was a relatively obscure if accomplished prosecutor with no previous predilection for showboating?
Did Geithner deputy Herbert Allison, a veteran Wall Street banker, really take Barofsky to lunch at a DC power restaurant after Barofsky had issued a series of reports critical of Treasury’s administration of TARP’s billions (which is an inspector general’s ostensible job), during which he delivered a clichéd “You’ll never work in this town again” speech?
According to Barofsky, Allison observed that Barofsky was “a young man, just starting out with a family, and obviously this job isn’t going to last forever. Have you thought at all about what you’ll be doing next?” After which he added, writes Barofsky, “I’m telling you, you’re doing yourself real harm. Out there in the market there are consequences for some of the things you’re saying.”
Worse, according to Barofsky, by dessert Allison had asked if he was looking for “something else in government? A judgeship?”
There’s lots more, including Barofsky’s account of capitulations the Obama team has made in the implementation of the Dodd-Frank financial reform bill that has rendered some of its key provisions relatively toothless. Again, that’s not something the Romney folks would criticize. Nor would they be terribly exercised over Barofsky’s explanation of how the rules governing the way TARP money was to be used and accounted for were so watered down that they never required or even encouraged the bailed-out banks actually to lend it out and thereby help revive the economy.
Reporters on the beat ought to get out there and tell us if Barofsky’s stories hold up. And they should use his description of these crucial, but often arcane, in-the-weeds issues, as a road map for future coverage no matter who wins in November.
2. Do CEOs ever pay the price?