TARP Fraud and Regulatory Reform: A Conversation with Neil Barofsky
Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (TARP), spoke with Neil Cavuto on Fox News' "Your World" about TARP fraud, financial regulatory reform, and the potential consequences of inaction. Barofsky highlighted the need for regulatory reform to prevent future financial crises, citing the $700 billion bailout program's potential to cost U.S. taxpayers over $23 trillion.
Key Takeaways:
- The Park Avenue Bank's former CEO, Charles Antonucci Sr., was charged with attempting to rip off $11 million from the TARP bailout fund.
- Barofsky stated that others have engaged in similar accounting frauds, recycling bank money to meet TARP requirements, and that there will be more cases like it.
- The TARP program's original lack of controls and restrictions on the money led to widespread abuse, but subsequent reforms have improved oversight.
- Barofsky suspects that Bank of America and Colonial Bank are involved in ongoing investigations, and that criminal suits could be pursued.
- The TARP program may have helped prevent the financial crisis, but Barofsky believes that the bailout has set up a more dangerous position for the economy due to increased moral hazard and concentration in the industry.
- Chris Dodd's proposed financial regulatory reform lacks teeth, according to Barofsky, and the Federal Reserve, which oversaw the TARP program, is also responsible for supervising banks, creating a conflict of interest.
Statistics:
- $11 million: the amount Charles Antonucci Sr. attempted to rip off from the TARP bailout fund.
- $700 billion: the total amount committed to the TARP bailout program.
- $23 trillion: the estimated cost to U.S. taxpayers of the bailout program, according to Barofsky's estimate.
- $553 million: the amount Colonial Bank applied for through the TARP program.
Sources:
- Federal News Service Transcript of Neil Barofsky interview on Fox News' "Your World," March 15, 2010.