Today is TARP (Troubled Asset Relief Program) Inspector General Neil Barofsky's final day in office. He's going out with one hell of a bang in an op-ed in Wednesday's NY Times, saying many things many people in this community--including yours truly--have been saying for years. Interesting thing is, IMHO, many other folks that are highly respected among those in the Democratic wing of the Democratic Party are also a part of this chorus nowadays.
You'd think the folks in D.C. would get a clue; but don't hold your breath. To those in power, it's all about the spin. (See further down below for more on this.) Having spent most of my adult life working in and around the media/media technology and communications industries (in the corporate sector as well as doing professional gigs for more than 25 Democratic candidates and officeholders, from city council races to national campaigns), I can tell you, having seen it play out on countless occasions, when spin crosses the line of credibility one too many times, it's all downhill from there. (Don't take my word for it, just ask FP-er and fellow Kossack brooklynbadboy about this inconvenient truth.)
Barofsky's last couple of paragraphs (if you haven't used up your 20 "free" monthly article views in the first 36 hours since the NYT switched over to pay-per-view, you really should checkout the whole piece) are immediately below.
Where The Bailout Went Wrong
Neil Barofsky
TARP Inspector General
New York Times Op-Ed
March 30, 2011
...In the final analysis, it has been Treasury’s broken promises that have turned TARP — which was instrumental in saving the financial system at a relatively modest cost to taxpayers — into a program commonly viewed as little more than a giveaway to Wall Street executives.
It wasn’t meant to be that. Indeed, Treasury’s mismanagement of TARP and its disregard for TARP’s Main Street goals — whether born of incompetence, timidity in the face of a crisis or a mindset too closely aligned with the banks it was supposed to rein in — may have so damaged the credibility of the government as a whole that future policy makers may be politically unable to take the necessary steps to save the system the next time a crisis arises. This avoidable political reality might just be TARP’s most lasting, and unfortunate, legacy.
Barofsky opens the column thusly...
TWO and a half years ago, Congress passed the legislation that bailed out the country’s banks. The government has declared its mission accomplished, calling the program remarkably effective “by any objective measure.” On my last day as the special inspector general of the bailout program, I regret to say that I strongly disagree. The bank bailout, more formally called the Troubled Asset Relief Program, failed to meet some of its most important goals...
Barofsky tells us the too-big-to-fail banks are now "flourishing" thanks to billions from U.S. taxpayers. (I'd beg to differ if you look just a little more closely than from the 32,000-foot view when it comes to firms such as Bank of America and Citigroup.) Record profits and a "seemingly permanent competitive advantage" are theirs as you read his words, according to the author.
We're reminded that the original TARP legislation--the Emergency Economic Stabilization Act--"...had far broader goals, including protecting home values and preserving homeownership."
He notes that these Main-Street-centric provisions in the final legislation were among the many compromises made on Capitol Hill that enabled the bill to be passed, in the first place.
We're told: "The act’s emphasis on preserving homeownership was particularly vital to passage." Later in the same paragraph, he notes: "Indeed, the act expressly directs the department to do just that."
But, he points out that the Treasury Department has not lived up to their side of the bargain.
...Almost immediately, as permitted by the broad language of the act, Treasury’s plan for TARP shifted from the purchase of mortgages to the infusion of hundreds of billions of dollars into the nation’s largest financial institutions, a shift that came with the express promise that it would restore lending.
Treasury, however, provided the money to banks with no effective policy or effort to compel the extension of credit...
Again, at the risk of recapping too much of it, and inadvertently discouraging readers from clicking through to the entire column, I'll stop recanting it at this point. I strongly urge you to read the entire piece. It's nothing less than a head-on evisceration of Geithner's seemingly-deliberate (I'm being very kind here) mismanagement of the program.
Then again, all one has to do is look at the ultimate fail that goes by the name of "HAMP" (the Home Affordable Modification Program), as Barofsky also notes it, to realize that for over 18 months Geithner kept acknowledging that the program was a failure; and, then he proceeded to do virtually little to fix it.
In fact, Barofsky refers to it, today, as "a colossal failure." But, you'll never hear that from the powers that be, directly. To them, it's all about the spin.
And, this brings me to Nomi Prins' guest post over at Zero Hedge on Monday...
If Spin Were Reality - We'd Have A Recovery
Nomi Prins
Zero Hedge
March 28, 2011
Wouldn't it be awesome if spin could actually solve problems? Then, you could just say the word 'recovery' every time you gave a speech, ignore any negative data, assume the markets are up because of general economic health and not a mass infusion of cheap money, and it would be so.
It wouldn't matter that New Home Sales are at their lowest rate since reporting began in 1962.
It would be fine that Existing Home Sales (the number of completed transactions) were down 9.6% over the month, and 2.8% since last year.
It would be cool that Pending Home Sales were down 2.8% over the month, and 1.5% over the year.
It would be a symptom of recovery that the average Sale Price for non-foreclosed homes is $246,358 - below 2003 levels, and for foreclosed homes, is $169,965...
...
...You could be the Fed Chairman, and disregard the idea of inflation, because if you don't count the cost of food or gas or health insurance or clothes or anything else sporting a price that has inflated, there is no inflation, and you can carry on buying, holding or subsidizing, the various forms of debt sustaining the 'recovery'...
If Nomi Prins' commentary is too exasperating for you, there's always our nation's leading expert on home prices, Yale economist Robert Shiller, from Monday, via Zero Hedge on Tuesday...
January Case Shiller Data Atrocious: "At Worst, The Feared Double-Dip Recession May Be Materializing"
Zero Hedge
03/29/2011 09:11
Case Shiller data is out, and it is as horrible as ever. The Home Price Index came at 140.86 compared to 142.42 previously. Basically the double dip refuses to stop, and that even despite yesterday's "stunning"(ly irrelevant) pending home sales number.“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."
From the release:
"Data through January 2011, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show further deceleration in the annual growth rates in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January..."
...
...“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. “With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now.
“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1% above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six consecutive months. At this point we are not too far off, and that is what many analysts are seeing with sales, starts and inventory data too.
Bold type is from Zero Hedge.
We live in a time of serious disinformation being the rule of the day when it comes to "news" about our nation's economy.
Don't focus upon the rapidly declining values of the primary asset of most of this nation's middle class. Instead, we should focus upon the stock market, where the top 10% own anywhere from 90%-98.5% (depending upon whose numbers you read) of all marketable securities and investment vehicles.
Forget about our nation's unemployed, and ignore the facts that, for people of color and our nation's recent graduates, it's all but a formal, full-blown Depression (as brooklynbadboy tells us in the link above), too.
Ignore the inconvenient truth that if it wasn't for record amounts of long-term jobless people just walking away from the labor force, altogether, and the lowest labor force participation rate in the past generation, there wouldn't even be a nominal decline in the Bureau of Labor Statistics' U.3 unemployment index, as we're seeing it today.
And, above all else, pay no heed to the statistics which tell us of record-breaking economic inequality between our nation's haves and have-nots.
Why take commentary from someone such as the outgoing Inspector General of our nation's TARP program at face value when there's a meaningless quote to be gleaned from a Treasury Department press release to contradict it?
It's all about the spin. Yes...just sit there on Main Street reading this...and remember the messages we're hearing from inside the Beltway (as someone used to "explain" it to me with their extended middle finger pointed at someone else with whom they were upset): "Just sit and spin!"