Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street by Neil Barofsky

In Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, Neil Barofsky, the first Special Inspector General for the TARP, takes a peek behind the curtain of Tim Geithner's Treasury Department. What he reveals in neither surprising nor pretty.

Barofsky, a self-admitted life-long Democrat, was appointed by George W. Bush and served under Barack Obama as the watchdog for the disbursement of the $700 billion in TARP funds. He exposes Geithner as the Wall Street apologist that he is. He turned the the $700 billion TARP bailout fund into a slush fund for the Wall Street banks and made every effort to remove all accountability. Geithner worked hand-in-hand with Wall Street executives to game the system and funnel millions of taxpayer dollars into the pockets of Wall Street executives.

From the book:

The further we dug into the way TARP was being administered, the more obvious it became that Treasury applied a consistent double standard. In the late fall of 2009, as I began receiving the results of two of our most important audits, the contradiction couldn’t have been more glaring. When providing the largest financial institutions with bailout money, Treasury made almost no effort to hold them accountable, and the bounteous terms delivered by the government seemed to border on being corrupt. For those institutions, no effort was spared, with government officials often defending their generosity by kneeling at the altar of the “sanctity of contracts.” Meanwhile, an entirely different set of rules applied for home- owners and businesses that were most assuredly small enough to fail. 

More than two thousand of these small businesses that weren't "too small to fail" were automobile dealerships. Except they did not fail, their businesses were stolen from them in a conspiracy between the Treasury Department, the Automotive Task Force and the manufacturers. Barofsky discusses how GM and Chrysler used bankruptcy to skirt protections that auto dealers receive under state law. That left more than 100,000 dealer employees scrambling for new jobs, pensions and health care.

Barofsky writes that Obama’s “auto team had pressured the companies to close the dealerships” more rapidly and in greater numbers than the firms had wished. He concludes that “relatively little thought had gone into Treasury’s determination that the dealership closings had to be immediate.” He reports that after “interviewing many of the same experts Treasury had consulted,” his group of auditors “found remarkably little support for the auto team’s determination that the viability of GM and Chrysler depended on their closing so many dealerships so quickly.”

It is now 2-3 years later and manufacturers, dealers and customers have moved on. But what about those who lost their stores because of Geitner's Treasury Department and the Automotive Task Force. Get over it right? Not really.

Some of these stores had been in the family for two or three generations. Many dealers were completely devastated financially when they had viable businesses stolen from them - because bureaucrats who had never created a job in their lives decided that it was best. It is a very sad statement on where we are as a country and what kind of power we have allowed our government to seize.

This is a very enlightening read if you want to learn more about the TARP funds or if you were disaffected in any way by the massive bailout of our country's financial system. Barofsky takes complicated and often boring financial material understandable.

Be forewarned though, this will stoke your cynicism of our federal government.