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Ear to the Ground

Fallout From the Bungled Bank Bailout

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Posted on Jul 23, 2012
jpellgen

The financial meltdown and subsequent bailout have dampened Americans’ faith in government and stirred widespread outrage. Neil Barofsky, who once served as special inspector general in charge of oversight of the Troubled Asset Relief Program, says that anger may point the way toward reform.

In an Op-Ed piece on Bloomberg’s website on Monday, Barofsky discusses the many ways the government bungled TARP—and how anger from the 99 percent may bring about change.

—Posted by Tracy Bloom.

Neil Barofsky via Bloomberg:

Treasury’s focus on TARP’s financial costs, of course, detracts from its significant nonfinancial costs, including the worsening of “too big to fail” and the lost opportunity to help struggling homeowners. But a separate cost—the loss of many Americans’ faith in their government—may still yield a major benefit.

The missteps by Treasury have produced a valuable byproduct: the widespread anger that may contain the only hope for meaningful reform. Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.

Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.

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