Barofsky: The Economy Is the Measure, TARP Failed
August 23, 2012 • 7:32AM

Former TARP Special Investigator-General (SIGTARP) Neil Barofsky defended his book "Bailout" in a CNBC-TV interview this morning, surrounded by four CNBC interviewers who were all ideological Wall Street defenders.

As he has emphasized in his recent comments on the failure of Federal regulators to do anything about the big banks' continuing crime spree, Barofsky said he had identified in Tim Geithner's Treasury and in the DoJ, to his "shock", an attitude of "total deference" to the big banks, so that Geithner represented Wall Street in the Obama government.

Barofsky's basic argument, as in the book, is that TARP was aimed solely to save Wall Street, while claiming falsely to be restoring bank lending into the economy, and claiming falsely to be repairing the mortgage meltdown crisis and stopping foreclosures. He is one of few who choose to remember that these were "stated purposes" of the TARP legislation, to aid in bringing back the U.S. economy, already in serious contraction in Fall 2008; and that it was supposed to lead to resumption of frozen bank lending, and stop the mass destruction of household wealth by foreclosures. But not only would Treasury apply no "sticks" to the banks for these purposes, Barofsky, said, it also would offer no incentives, nor apply any measures to see if they were being attained — everything was up to the banks to decide, and Treasury solely to restore Wall Street to "health".

The CNBC anchors all insisted that since TARP had "prevented Armageddon" while not losing too many tens of billions, it was a great success. Ironically, in the same hour they were reporting (along with other media) a study released by the Pew Trust today which showed the American "middle class" shrinking between 2000 and 2010 and falling to its lowest share of national income and wealth.

Like earlier national census reports on which it was based, the Pew study shows that because Obama's sainted "middle class" has so much of its wealth in its houses, the mortgage meltdown selectively and greatly impoverished it, while the long collapse has blasted its income. The one notable feature is that the Pew study involved surveys which continued up through June of 2012. And it found that 56% of "middle class" households reported in 2011 that they had to cut their household spending that year; even more — 62% — reported the same thing in 2012. Evidently Obama's "middle-class recovery" has not reached them.