Bailout Scandal Expands w/ 20 TARP Fraud Probes

Well, now we know the real reasons as to why Bernanke, Summers and Emanuel were all over the Sunday talk shows telling us why they won't be needing any more TARP (Troubled Asset Relief Program) money. It's simple, really. After today's report hits the Hill from Bailout Inspector General Neil Barofsky's office, the administration doesn't stand a snowball's chance in hell of getting another cent.

And, with the announcement that Barofsky's initiating no less than 20 civil and criminial fraud investigations, as well, I'd even go as far as to say that some heads are gonna' roll.

In what may only be described as a scathing, brutal indictment of the Federal Reserve's and the Treasury Department's management of the Wall Street bailout to date,  the New York Times front page for Tuesday tells us how Bailout Inspector General Neil Barofsky's latest report, scheduled for release later today, no less than slams U.S. government bailout efforts, especially with regard to the "public-private investment partnerships," calling them:   "...inherently vulnerable to fraud and should not be started without stronger safeguards."

Here's the story on the I.G.'s report. You really should read it! Programs to Help Banks Are Seen as Open to Fraud.

Frankly, I don't see how Secretary Geithner and Fed Chair Bernanke are going to be able to defend their job performance after this story circulates.  Meanwhile, Geithner's due up on the Hill for testimony today, too. Should be quite a circus.


Programs to Help Banks Are Seen as Open to Fraud
By EDMUND L. ANDREWS
Published: April 21, 2009

WASHINGTON -- The Treasury Department's most ambitious plans to rescue troubled banks -- partnerships between the government and private investors, backed by the Federal Reserve -- are inherently vulnerable to fraud and should not be started without stronger safeguards, a top government investigator warned in a report to be released Tuesday.

The report also warned that the Treasury's $700 billion Troubled Asset Relief Program has evolved into a $3 trillion effort of "unprecedented scope, scale and complexity" and comes with too little oversight and too little information about what companies are doing with the taxpayer money they are getting.

--SNIP--

Noting the widespread public outrage unleashed over the Treasury's huge payments to the American International Group, the failing insurance conglomerate, Mr. Barofsky warned that Treasury officials were jeopardizing the credibility of their efforts by not requiring companies to disclose far more about their use of taxpayer money.

"Failure to impose this requirement with respect to the injection of yet another $30 billion into A.I.G. would not only be a failure of oversight, but could call into question the credibility of the government's efforts..."

As we also learn from The Hill, Barofsky's report is just the tip of the iceberg. Here's the deal on his announcement that he's commenced 20 civil and criminal fraud investigations: Bailout's top cop probes twenty TARP fraud cases.


Bailout's top cop probes twenty TARP fraud cases
The Hill
By Silla Brush
Posted: 04/21/09 12:01 AM [ET]

Neil Barofsky, the top watchdog over the government's financial bailout efforts, is pursuing 20 civil and criminal investigations into potential fraud in the programs.

--SNIP--

His office already has served subpoenas in connection with criminal investigations, but declined to comment about the specifics of any investigations. Just applying for TARP makes any firm a potential subject of a case.

"We've received criminal investigation referrals as well from Congress that we're looking into," added Barofsky.

In addition to the 20 investigations, his office has opened six audits into, among other issues, the role of outside lobbying and other influences in winning federal money; the $165 million in bonuses at insurance firm AIG; Bank of America's participation in four different government programs; and an overview of how the banks receiving equity from the government have used that money.

--SNIP--

He is working with the FBI, the Securities and Exchange Commission and other federal agencies to set up a TALF task force to root out fraud. He said he is looking into a similar effort on the PPIP program. "Once a fraud like this takes root, it can really spread very quickly and then all you're doing is reacting," he said.

Barofsky has moved to Washington full time and, considering that some of the programs will be around for five or more years, he knows he is in for the long haul.

"I think we're going to be around for a long time," he said.

First Elizabeth Warren and now Bailout I.G. Neil Barofsky have been charged with oversight of these matters and they've both come to the same conclusions.

Looks like the shit's hit the fan.

Need I say anything else?

What do you say?

Tags: Ben Bernanke, depression, Elizabeth Warren, FBI, government fraud, Neil Barofsky, rahm emanuel, Recession, Securities and Exchange Commission (SEC), Tim Geithner, Wall Street (all tags)

Comments

12 Comments

Tips: This is the ugly way to get Wall St. $$$...

...diverted to Main St. But, with all the suffering going on throughout this country, any effort to redirect money to Main Street is a good thing, no matter how twisted that path may be.

by bobswern 2009-04-21 09:11AM | 0 recs
Good, also IRAQ

There is/was a HUGE amount of fraud in money spent on Iraq too.

I hope that they address that as well.

by architek 2009-04-21 12:19PM | 0 recs
What do you say?

I say, your diaries always make me want to say screw it, and go get a drink.

It won't change this incredible cluster-F, but it may dull the pain for a while.

by WashStateBlue 2009-04-21 09:13AM | 0 recs
Double Tanqueray & Tonic Pleez... n/t

by bobswern 2009-04-21 09:17AM | 0 recs
Re: Double Tanqueray & Tonic Pleez... n/t

no ice and a lemon for me.

by the mollusk 2009-04-21 09:43AM | 0 recs
Re: Are you saying

WE AREN'T DOOMED! ???

(I never thought we were.)

by QTG 2009-04-21 09:35AM | 0 recs
You conflate being "f**ked over"...

...with being "doomed." One is not usually permanent...the other is.

We have been grossly "f**ked over," and we'll be dealing with the adverse effects of that for a very long time. Are we forever doomed? Ummmm...no.

(Are some--perhaps tens if not hundreds of thousands or millions--people going to, literally, die from the side effects of these travesties? Yes. So, some are, in fact, doomed. Just ask anyone without healthcare, for instance. [Those that will be hurt most by financial-related delays in the implementation of a national healthcare policy, for instance.] The majority, however, are probably not "doomed.")

by bobswern 2009-04-21 10:45AM | 0 recs
Re: You conflate being "f**ked over"...

Maybe 'doomed' is a bit strong....

Perhaps something like this:

There is a storm gathering.

by QTG 2009-04-21 11:03AM | 0 recs
Great!

Quoting the end of Terminator Movie?

Right before the machines launch the nuclear war.

Really feeling MUCH better now!

by WashStateBlue 2009-04-21 11:12AM | 0 recs
by QTG 2009-04-21 12:30PM | 0 recs
Neil Barofsky rocks!

No wonder that Republican Senator kept him Nom blocked, he's an actual watchdog that watches and barks with the foxes are in the hen house?  What a concept, eh?

We need more Barofsky types and less Larry Summer types is my going forward suggestion!

by WashStateBlue 2009-04-21 09:43AM | 0 recs
No fraud, no bailout

From a casual perspective, it's hard to know what to make of these stories.  In a way, fraud seemed to be the ultimate goal of the bailout anyhow.

by the mollusk 2009-04-21 10:40AM | 0 recs

Diaries

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