Neil Barofsky

  • Aired:  02/07/13
  •  | Views: 12,474

"Bailout" author Neil Barofsky discusses the double standards of the TARP program and the alien culture of Washington DC. (6:29)

>> Jon: WELCOME BACK.

MY GUEST TONIGHT WAS THE SPECIAL INSPECTOR GENERAL IN CHARGE OF OVERSIGHT OF THE TARP PROGRAM.

CURRENTLY A FELLOW AT THE NEW YORK UNIVERSITY SCHOOL YOU LAUGH HIS BOOK IS CALLED "BAILOUT."

PLEASE WELCOME TO THE PROGRAM NEIL BAROFSKY.

SIR, HOW ARE YOU?

THANK YOU FOR JOINING US.

[CHEERS AND APPLAUSE]

HAVE A SEAT.

THANK YOU FOR BEING HERE.

>> THANK YOU FOR HAVING ME.

>> Jon: FIRST OF ALL I'M RANGE RIX THE BOOK IS CALLED "BAILOUT." I'VE READ AT LEAST TEN OF THIS

TYPE OF INSIDER FINANCIAL.

I DID NOT KNOW YOU COULD DO IT IN A WITTY AND ENTERTAINING FASHION.

I WISH I HAD KNOWN THIS NINE BOOKS AGO.

[LAUGHTER]

IT'S REALLY GOOD AND REALLY ENTERTAINING AND REALLY ALLOWS TO YOU SEE THE HUMAN WORLD THAT

YOU WERE TRAPPED IN WHEN YOU WERE OVERSEEING TARP.

>> I WAS A FEDERAL PROSECUTOR FOR EIGHT YEARS.

I GOT TAPPED TO DO THIS JOB.

A LIFELONG DEMOCRAT GETTING APOINTED BY PRESIDENT GEORGE W.

BUSH WHICH WAS THE CRAZIEST THING EVER.

I WENT DOWN WITH MY GOOD FRIEND WHO WAS ALSO A PROSECUTOR.

WE WENT INTO THIS ALIEN WORLD OF WASHINGTON WHERE EVERYTHING WAS UPSIDE DOWN.

WE CAME FROM A CULTURE WHERE DOING THE RIGHT THING, PUTTING BAD GUYS IN JAIL, WAS WHAT WE

WERE SUPPOSED TO DO.

WE WE WENT TO A CULTURE WHERE EVERYBODY WAS CONCERNED ABOUT LOOKING OUT FOR THEMSELVES, THE

NEXT NEWSPAPER REPORT RATHER THAN THE FINANCIAL MELTDOWN WE JUST WALKED INTO.

>> Jon: THE CRAZY PART -- WE SPENT SO MUCH TIME TALKING ABOUT THEORIES OF WHAT MIGHT WORK AND

WHAT MIGHT NOT.

WHAT WE DON'T REALIZE BEHIND THE SCENES ITS PLANS AND PROGRAMS ARE EXECUTED BY HIGH SCHOOL KIDS

AND I SAY THAT NOT TRYING TO DENIGRATE HIGH SCHOOL KIDS.

[LAUGHTER]

THE AMOUNT OF HEADY PARDON THE YIDDISH (bleep) YOU HAVE TO DEAL WITH.

THE FIRST MEETING YOU HAD WITH ALLISON.

>> HERB.

>> Jon: WHERE HE EXPLAINS HOW YOU ARE SUPPOSED TO BE.

>> THAT WASN'T HIM.

THAT WAS THE TREASURY DEPARTMENT SECRETARY GENERAL ERIC.

THEY ALL GAVE ME THE SAME IDEA THAT THE IDEA IS TO HAVE THAT PERFECT GOLDIE LOCKS MINIMUM.

DON'T BE TOO -- A LAPDOG WHICH WAS TOO PLAYING GOLF ON THE WEEKENDS WITH HANK PAULSON OR

SOMETHING LIKE THAT.

BUT YOU CAN'T BECAUSE HANK HAS SORT OF A DISTENDED PINKY SO THAT WASN'T AN ISSUE.

>> Jon: THERE'S THE INSIDE DIRT ON THE FORMER TREASURY SECRETARY.

>> DON'T BE TOO AGGRESSIVE BEING A JUNKYARD DOG.

DON'T MAKE TOO MANY WAVES.

DON'T MAKE TOO MUCH WAVES BUT DON'T APPEAR TOO COMFORTABLE.

BEHIND ALL THIS, I FIRST HEARD IT I WAS LIKE WAS THIS SOUNDS REASONABLE.

THEY WERE SAYING THE BEST WAY TO KEEP YOUR HEAD DOWN, KEEP YOUR BUDGET COMING AND NOT ROCKING

THE BOAT TOO MUCH WHICH IS THE BEST PATH TO GETTING A HIGHER, BETTER JOB IN WASHINGTON THAT'S

SORT THE WAY THE TOWN WORKS JORCHG IT'S GO ALONG OR GET ALONG.

IT TURNS INTO A WEIRD ALMOST BRAZIL LIKE ENVIRONMENT WHERE YOU ARE BASICALLY -- YOU CAN'T

GIVE HOMEOWNERS MONEY FOR THEIR MORTGAGE PROGRAMS BECAUSE THAT WOULD CREATE MORAL HAZARD WHILE

YOU ARE HANDING TRILLIONS TO BANKS BECAUSE THEY ARE TOO BIG TO GO AFTER.

THIS IS THE ONE OF CORE IDEOLOGICAL THINGS WE RAN INTO.

WHEN IT CAME TO THE BANKS ANYTHING AND EVERYTHING WAS ON THE TABLE.

SAVING THE BANKS OF PRIORITY ONE, TWO AND THREE.

TARP WAS SUPPOSED TO HELP HOMEOWNERS.

IT WAS SUPPOSED SPO HELP ALMOST 4 MILLION PEOPLE STAY THEIR HOMES.

THE JUSTIFICATIONS FOR NOT DOING THE RIGHT THING, NOT REDUCING PRINCIPLE, NOT FULFILLING THE PROMISE.

WE CAN'T HELP AN UNDESERVING HOMEOWNER.

THAT WOULD BE TERRIBLE.

THE FINANCIAL INSTITUTIONS THAT RODE THIS COUNTRY INTO THE DITCH, THE UNEMPLOYMENT --

THAT'S NOT WHAT GET THEMES MONEY.

LET'S MAKE SURE THEY ARE ABLE TO PAY THEIR BILLIONS IN BONUSES BECAUSE THAT MIGHT UPSET THE SYSTEM.

IT WAS AN INCREDIBLE DOUBLE STANDARD.

>> Jon: IT'S A BIZARRE WAY OF TREATING -- THE PEOPLE CREATED THE CRISIS HAVE TO BE CODDLED

BECAUSE YOU NEVER KNOW WHEN THEY MIGHT GO OFF AGAIN.

YOU NEVER KNOW WHEN THEY MIGHT THROW THE ECONOMY OVER THE CLIFF AGAIN.

IT'S LIKE A SPOILED CHILD.

WHAT IF WE CHARGE YOU NO INTEREST.

[ LAUGHTER ]

AND YOU COULD SELL IT BACK TO US FOR 5%.

WE DON'T CARE.

DON'T HURT US AGAIN.

>> A LOT OF BANKS DID AND STILL DO HOLD A GUN TO THEIR HEAD.

THEY HOLD US HOSTAGE.

IF YOU BRING CRIMINAL CHARGES AGAINST THEM YOU BRING THEM DOWN AND THAT BRINGS DOWN THE SYSTEM.

YOU CAN'T GET TOO TOUGH WITH THEM.

YOU CAN'T BREAK THEM UP BECAUSE IT TEARS DOWN ITS SYSTEM.

IT'S ALL JUST FIVES NOT THAT THERL NECESSARILY TRUE BECAUSE IT'S PRESERVING THE STATUS QUO

AND KEEPING THEIR POLITICAL POWER WHICH IS SO STRONG IN WASHINGTON IN TACT.

>> Jon: CAN YOU STICK AROUND FOR A LITTLE BIT?

I WANT TO ASK YOU ABOUT THAT ASPECT OF IT AT LEAST BEHIND THE SCENES THERE IS A RECOGNITION

THAT THIS IS USELESS TO SOME EXTENT?

THERE'S A GREAT THING IN THERE ABOUT HOW THEY CHANGED THE WORLD.

FOUR MILLION HOMEOWNERS HAD TO BE HELPED.

THEY CHANGED THE WORDING THAT SAID WE HAD TO LOOK FOR FOUR MILLION BECAUSE WE ONLY HELPED 700,000.

>> IT'S A CLASSIC WASHINGTON MOVE.

THE PROGRAM GOAL IS TO HELP FOUR MILLION PEOPLE.

IT WAS NEVER GOING TO BE CLOSE BECAUSE IT WAS SO BROKEN.

THEY WEREN'T REALLY CARING ABOUT THOSE PEOPLE, THEY WERE TRYING TO PROTECT THE BANK.

CHANGE THE GOAL.

WE DON'T WANT TO HELP FOUR MILLION PEOPLE STAY IN THEIR HOMES.

WE JUST WANT TO MAKE FOUR MILLION OFFER.

>> Jon: AS LONG AS THOSE POWER TO MILLION DON'T TAKE US UP ON IT.

"BAILOUT" IS INCREDIBLE.

YOU HAVE TO GET.

THIS IT'S ON THE BOOKSHELVES

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