Barofsky Continues Assault on Geither, Advocates Glass-Steagall
August 1, 2012 • 11:24PM

Former TARP Inspector General Neil Barofsky is continuing his war on Obama's Treasury Secretary, Tim Geither, giving a couple of interviews a day called for Geither's removal and promoting Glass-Steagall as a means of breaking up the "too big to fail" banks.

* In an interview with Thomson-Reuters' "Compliance Complete" service, published July 31, Barofsky blasted Geithner's coverup of money-laundering. Asked about Geithner's claimed reason for not tracking dirty money, on the excuse that money is "fungible," Barofsky replied: "We never thought Geithner's argument was legitimate, but was just a maneuver to hide the ball and evade transparency. Prosecutors can't follow particular dollar bills but they can follow the money to tell legitimate assets from illicit proceeds."

* On "CurrentTV.com" on July 31, Barofsky again called for Geithner to be fired. "I think that he should be removed because of the policy choices that he made, because of his disastrous oversight of the TARP program, because of its failure to meet those Main Street goals that should have been just as important as their ferocious commitment to save the too-big-to-fail banks, and to preserve the status quo at all costs."

* And appearing on PBS's "Frontline" on July 31, Barofsky blasted Geithner as "yet another example of a captured government official who, because of fundamentally flawed ideology, puts the interest of Wall Street and a handful of banks over that of Main Street and the broader economy." And, Barofsky added, "he did a horrible job as Treasury Secretary."

"His behavior today is entirely consistent with that broken ideology," Barofsky elaborated. "He's the head of a Financial Stability Oversight Council that has done absolutely nothing to rein in the power of the giant banks. There's been no effort to break them up. He led the effort against a bipartisan Senate effort in 2010 that would have broken up the banks and limited their power. At every critical juncture, he's chosen the side of the banks over that of homeowners and Main Street, so I don't think he's done a good job and I don't think he should still be there."

Explaining why he says that Dodd-Frank made things worse, Baroksky siad that the "too big to fail" problem is getting worse; as examples, he cited JPMorgan Chase, HSBC, and the LIBOR scandal. "The big banks assume that nothing will ever happen to them, and that they'll never be punished, because the risk that they will bring down the entire system "puts them above the law."

Asked what should be done, Barofsky answered, "It's very simple. You have to remove the presumption in the market that the banks are too big to fail, which means that they don't play by a different set of rules any more." As to how to do this, Barofsky said the banks can be broke up "through the re-enactment of Glass-Steagall," which he called "a good idea," or through size caps, such as in the Sherrod Brown-Ted Kaufman SAFE Act, which he said "had bipartisan support before it was defeated by Geithner and the Administration."