Econintersect: Former Secretary of the Treasury, Timothy Geithner, found a a number of occasions to criticize Neil Barofsky in his new published book, Stress Test. Barofsky is the former SIGTARP, the Special United States Treasury Department Inspector General overseeing the Troubled Assets Relief Program (TARP), from late 2008 until his resignation at the end of March 2011. As the auditor of the Treasury activities in administering the TARP, Barofsky was frequently in an adversarial position with respect to Geithner: the outside auditor vs. the company accounting department, if you will.
Neil M. Barofsky
As to the nature of the attacks on Mr. Barofsky in the book we can refer to William K. Black who has posted two articles on the subject at New Economic Perspectives. Prof. Black referred to the treatment of Barofsky as constituting ad hominem attacks. Black specifies the following "attacks":
Geithner is outraged that Barofsky: "would requisition firearms and bulletproof vests for his antifraud troops."
Geithner complains: “Barofsky’s desire to prevent perfidy was untainted by financial knowledge or experience.”
Geithner claims that Barofsky "assumed our motives were self-evidently sinister..."
Prof. Black attributes ignorance of law enforcement to Mr. Geithner in making the first of these attacks.
He uses the career record of Mr. Barofsky as both a federal prosecutor of financial crimes and a white collar defense attorney to counter the second with an added item in evidence the high quality of the SIGTARP reports issued under Barofsky.
For the third attack Prof. Black submits that the SIGTARP reports are evidence of Barofsky's objectivity.
With that background it makes it easier to interpret the Barofsky response. We provide some excerpts:
Unfortunately, rather than addressing the many important policy disagreements that we had during the time - most importantly, our repeated criticism that Mr. Geithner's management of the bailout woefully failed to fulfill the promise made to the American people that TARP would be used to help struggling homeowners on Main Street as well as the big banks - Mr. Geithner resorts to already discredited factual mischaracterizations and name calling.
Mr. Geithner suggests that it was improper for the federal law enforcement agents who worked at SIGTARP to carry weapons or have bullet-proof vests. This comment demonstrates Mr. Geithner's ignorance with respect to law enforcement safety protocols and is frankly insulting to the dedicated law enforcement officers who work at SIGTARP. SIGTARP's federal agents have all of the same law enforcement powers and responsibilities as the FBI, the Secret Service, and any other white-collar federal law enforcement officers.
Sadly, this lack of comprehension of the important role of law enforcement too often informed Geithner's attitude toward potential fraud in the TARP programs. His team often resisted antifraud protections that we insisted be included in the programs, claiming that the banks who were participating in the programs could simply be trusted, a perspective that now has proven to be naïve at best. Thankfully, with help from Congress, other oversight bodies, and even, at times, the Federal Reserve, we were able to overcome Treasury's resistance and protect the TARP programs from potentially devastating losses, something that Mr. Geithner once even thanked me for.
I take great pride in the professional and skilled team that we assembled and the detailed and widely respected reports detailing the bailout that we issued. Indeed, they have widely been heralded as the most complete record of the government's efforts. Mr. Geithner also ignores the facts when he suggests that we failed to report on the returns on TARP's investments and that we criticized him without suggesting alternatives. In fact, we issued reports every single quarter that detailed how much money came back to Treasury and that included dozens of recommendations to improve the programs.
Mr. Geithner apparently concludes that our relatively unknown agency was "damaging" to his efforts to persuade the American people to support his program. While I take it as a compliment that he thinks that our team had such a disproportionate impact, I suspect that the truth is slightly different. The American people considered TARP an unfair giveaway to the largest banks and a failure for Main Street because, in fact, that is exactly what it was.
- Tim Geithner Says Some Things About Me. My Response. ( Neil Barofsky, LinkedIn, 09 May 2014)
- Geithner’s Single Most Revealing Sentence (William K. Black, New Economic Perspectives, 12 May 2014)
- Geithner’s Other Ad Hominem Attacks on Barofsky (William K. Black, New Economic Perspectives 12 May 2014)