Welcome to your Monday Wonkette Interview Post! We were fortunate enough to speak with former Special Inspector General for TARP (SIGTARP!) Neil Barofsky over the telephone, whose new memoir Bailout, recounting his stint in Washington from late 2008 until early 2010, is flying off the shelves of bookstores like the dickens. The book’s theme is, “everything in Washington is completely screwed so let me terrify you with endless stories about this.” It’s the feel-good beach book of the summer!
Your Wonkette got to meet Barofsky during our early summer jaunt to Netroots Nation, where he and a few other hardasses held an extraordinary panel on the foreclosure fraud crisis, and the general lack of justice for victims of bank malpractice over the past however many years. The panel was almost as unsparing in its criticisms as Bailout is in its — for both the Bush and Obama administrations. And revealing! The very first scene, see, shows former Merrill Lynch executive and TARP “czar” meeting Barofsky for drinks and telling him to back off his investigations, or the “tone” of them at least, if he ever wants to get another decent job for the rest of his life. Just like in the movies!… but very, very, very, very real.
Part 1* of our interview covers Barofsky’s relationship with Treasury Secretary Tim Geithner (it is poor), why he and oversight buddy Elizabeth Warren are viewed differently by congressional Republicans, whether he is a “media whore,” and such like. So start reading now or just skip to the comments and write tl;dr.
Wonkette: Right when your book was coming out, you got pushback from Tim Geithner in an interview. And for a while there it was the whole nerd Internet fighting over “Team Neil” vs. “Team Tim.” What has the pushback for this release been like compared to when you were on the job?
Barofsky: In some ways I think it’s unfortunate that it’s being characterized, as you said, “Neil vs. Tim,” because the problems I identify in the book go far beyond just Tim Geithner. He is a symptom of a greater disease of Wall Street’s control in Washington. But look, the fact is, of the 27 months that I was down in Washington, he was secretary of the Treasury for 26 of them, so I guess it’s natural that since he was ultimately responsible for so many of the horrific decisions that were made, he’s going to be viewed as the primary target of the criticisms of the book.
As far as the [pushback], I mean, it sort of went exactly by the playbook, the playbook that they used the entire time I was down in Washington. It started with this false outrage of how “deeply offended” he was — you know from the book, it almost a running joke about how “deeply offended and how “personally offended” they are…
Yeah, it was Herb Allison who would say “I am personally offended” over everything.
It’s a playbook, that’s what it is. Not an effective one, but they follow their script. And then, just like they always did when I was at SIGTARP, he comes up with these false, straw men arguments that are just untrue. He suggested that I said he worked at Goldman Sachs, which of course I never did, and then even resurrected this old three-year lie that Treasury rolled out, and that I talked about in the book, falsely claiming that I said TARP was going to cost trillions of dollars in losses. I never said — it is something Treasury falsely claimed I said back in 2009. I thought it was pretty pathetic that they didn’t even bother to come up with new lies, they had to go back to resurrect the old, bad lies of ’09.
Did they pull out “he’s a Republican because George W. Bush appointed him” this time?
You know, they didn’t. I think that one became so tired and old that no one would believe it at this point.
I still see it. It’s an election year, so everyone is completely insane right now, but I’m still reading comments and tweets saying, “Oh, he’s a Republican, did you see George W. Bush appointed him??”
As you know, having seen me speak at Netroots, it’s hard to paint me as a Republican. But look, I think that’s problem. Everyone is so conditioned that every criticism and any discussion involving Washington has to be colored by partisan politics that that’s going to be the reflexive reaction of people. Nobody still can just accept the fact that some people are trying to tell the truth about what happened without a political agenda — that I could be a lifelong Democrat and be revolted just as much by Democrats in Washington as Republicans. I think at an intuitive level most people get that by this point; it’s hard to see what happened with the bailout, even if you’ve never read a book about it, or never read a report about it, and not know in your gut that something very wrong happened here. I wrote this book to try to bring people behind the curtain and see that their gut is really right. The government really has been screwing them and really has been serving the interests of Wall Street banks and not theirs.
Why is it that when you do aggressive oversight over TARP, or really go after the Obama administration on that, Republicans would cheer you, but not Elizabeth Warren? You two are basically of the same mindset. Why do they get along with you and why do they loathe her?
I don’t really know. I think part of it is that — and I didn’t really track the hostility towards her — but I think that… probably it was more in her role with the consumer protection bureau than in the congressional oversight panel. Part of it is that she was appointed by Harry Reid and I was appointed by George W. Bush. And personal politics aside, I was not viewed as a partisan pick. Even though I was a Democrat, I was not a partisan pick by a Democrat. I don’t think that had anything to do with how Elizabeth did the job — she was remarkably harsh on the Obama administration, as she was on the Bush administration, much like I was. So I think that might be a part of it.
And then the consumer protection bureau was something a lot more substantive and different from bailout oversight criticism. She became the leading force in a bureau that a lot of financial institutions and Republicans in Congress, and some Democrats, were opposed to. She became the face. It was her idea, and she was there in this acting capacity for a year and helped build it. She became the political target. Whereas for me, I was a Bush appointee, and the things that I was advocating for, kind of incredibly, became controversial. The basic concepts of avoiding fraud and having strong oversight should be something that Democrats and Republicans can get behind. At some points when you’re making arguments about fraud and transparency, it’s even hard for those under the thrall of [bank] interests in Congress to be vocally opposed to, “gee, maybe the banks should tell us where the money is.”
As you mentioned in the book, inspectors general usually are worried about their careers and don’t want to call too much attention to themselves because it might annoy the wrong people, or rock the boat so much that it’s not worth it. Why do you think they picked you when you had a reputation, and since the Bush administration didn’t want a SIGTARP office in the first place, for being a hardass? It seems like a wonderful coincidence.
You also have to remember that, you know, I was a federal prosecutor and when I interviewed for this job, my perception of what the job was going to be was law enforcement. I was going to start a law enforcement agency that was going to police the TARP. Everybody agrees that it’s a good idea that if somebody tries to steal from the program (well, maybe not everybody, as I learned), but at least from a political perspective, the view was that I’d come in and be the top cop and help police the program. You know, that seems like a good idea. I don’t think anybody could have known, and, frankly, I myself would never have known that the job would shift and I would suddenly become so involved in the mechanics of oversight on issues that were not just reactive law enforcements but proactive fraud prevention.
Again, given the experiences of other IGs, I did not follow the traditional path of what IGs are supposed to do. I don’t know if there’s any way of looking at my background of locking up Wall Street criminals and making the logical jump that I was going to be as aggressive as I was on program formation. And no one was as surprised as me when I got down there and saw how little attention was being made to very basic components of anti-fraud provisions. I was also just as taken aback by the reluctance and refusal to adopt a lot of our recommendations, which seemed to be very pedestrian and very straightforward to me. So it’s hard to envision all of those things would happen.
I’ll never know what went on in the minds of the Bush folks, but also I think part was that it was a lame duck administration, and I don’t know how much they really cared about the issue. They wanted someone who could get through, and the fact that I was a Democrat meant I could get through. And generally they thought it was a good idea to have someone in place because there was a lot of pressure in Congress to get somebody in, because stacks of money were streaming out the door with no internal oversight.
So I don’t know if it was so much a Machiavellian plant to put me in the next administration as it was a matter of convenience to say, “let’s go get a prosecutor, this guy’s got a strong background in mortgage fraud, a good background in securities fraud, comes from a good prosecutor’s office, is a lifelong Democratic, voted for Obama, gave money to Obama, we know he’ll get through.” I don’t think there were high-level meetings among the president and his advisers in shaping the perfect pick for SIGTARP… There wasn’t a lot of time to dig into my personality quirks. I had a decent resume for the job, possibly the best resume for the job, so they said “What the hell, we’ll go with him.”
The thing about so many of the people in Treasury, as described in your book: I understand their viewpoint that [the financial system] was deteriorating so quickly and they felt they needed to move the money as quickly as possible, so fraud prevention and oversight weren’t their top priorities. But it was their hostility to any fraud prevention, the refusal to listen to any idea, that any provision that’s put out there to safeguard this money is going to scare the banks from participating — how widespread is this attitude?
It is ubiquitous. It was everywhere I turned. And I think part of it was this concern about getting the money out as quickly as possible. But I think an even larger part of it is that they really didn’t believe… they thought of me as chicken little, they didn’t really believe that these institutions would do the types of things that I was worried they would do.
You’ve got to remember that most of these people came from a Wall Street background. They didn’t identify with the suspicions I had, they identified with their former colleagues and the people that they talked to on the phone everyday. It’s very important to remember that the people who were framing a lot of these programs were the Wall Street people themselves. Constant telephone calls. I mean if you look at Treasury’s call records and look at the number of times they’re talking to CEOs of large banks versus the number of times they’re talking to, as I was once described, “squinty-eyed prosecutors,” or anti-fraud advocates, that level of access tells you where their concerns were. So first of all, they just didn’t see my concerns as being valid based on their supposed knowledge and view of these people, and that’s part of the captured ideology of Washington.
They truly seemed to believe that “reputational risk” would save the world, would prevent the banks from doing anything bad, after that whole idea had just crumbled right in their faces.
It’s a very Greenspanian idea that they’d police their own fraud and loss of reputation. And even with this remarkable evidence of the financial crisis smacking them in the face, they still couldn’t let go of what was a very antiquated and disproven idea. The other thing is, there was a real condescension to anyone — to me in particular, but Elizabeth also bore the brunt of this — to anyone who didn’t come from a big bank background. Things are written off as, “what does he know, he never worked at a bank.” It’s comical that having a background of prosecuting bankers doesn’t put you in a pretty good position to understand the loopholes and vulnerabilities for those who wanted to commit fraud. I think that was probably most telling. And even Geithner, who never worked at a big bank, that attitude just oozed out of him.
Or like what they’d said about [former Fed chair] Paul Volcker — that he’d never worked in capital markets. I think that was Jamie Dimon?
That was Jamie Dimon. There’s that condescension, and when you combine those two things, that sort of refusal to acknowledge the fallibility of the interests that they serve and with this real condescension for someone who doesn’t have a background in banking, you hit this brick will. And I saw that with Geithner, of just not being willing to listen. You know, even if you don’t value my arguments, you think that my arguments are nonsense, at least listen to them and engage in an argument. But it was never that. It was always, you’re stupid, you don’t understand that money is fungible.
And I think going back to one of the original things we were talking about, there’s also this presumption in Washington that continues, and it’s part of this whole Neil vs. Tim debate and so many other things, that everyone has to have an angle. Everyone has to have a motive. Everyone’s trying to think of their end game, their long game. And when people don’t have an end game or long game — for me, it sounds cheesy, but my end game was to do the job I took an oath of office to do the best way possible, and to fulfill that oath and protect the taxpayer. That really was my endgame. Nobody can believe that. They just can’t process that. That anecdote in the beginning with Herb Allison, when he’s saying “I know you keep saying this, but let’s get back to what you really want, what is it you want from this?”
How often conversations like this happen? Hourly, daily?
Not that often, the “if you know what’s good for your family” stuff… But the rest of that conversation, the “What are you doing this for? What is your angle? What are you trying to get out of this?” I really think it is a frustration.
They’re looking for something because they want to get you out of the way.
I think you’re right. But it’s that… they still can’t believe that that wasn’t my endgame, that I didn’t have some secret endgame. It doesn’t work in Washington not to attribute some other motive. Look, I think Elizabeth did a lot of the same stuff. She was, again, doing things just because it was her job, not because she wanted to be the director of the consumer protection bureau, not because she was planning to run for Senate — she was not planning to run for Senate when she was down there. This was not her endgame when she was doing congressional oversight. She was trying to do her job. But, again, that’s when the juvenile insults start coming out, because there’s nothing else for them to grasp on. It’s much easier to think that someone like me is politically motivated for something else than to address their arguments. Once you do that, then you don’t have to validate their arguments and discuss them seriously. You can brush them off.
There are these very strange customs that have built up over such a time, like how you were saying, among the IGs, if you try to use the media to help advance the things you’re working on, you’re labeled a “media whore.”
It’s really staggering because it’s how every aspect of Washington works, is through the media. Yet somehow inspectors general have convinced themselves, or been convinced, that if they use the same mechanism that everyone else uses, that somehow or other they’re not doing their job or they’re whores… I think frankly that for a lot of the IGs, hiding behind the “media whore” criticism–
They’re protecting their careers.
It’s a good excuse to not potentially engage in attention-gathering tactics that could have actually advanced the cause of what your job is, if you say, well, “I’m not going to engage with the public in this, I’m just going to keep turning out my reports and sending them to the agency, and the agency will ignore them.” And then the circle continues.
*Part II of this interview will come whenever your lazy Wonkette blogger finishes transcribing the damn thing. Don’t hold your breath.Related