krebscycle

“Truthiness is what you want the facts to be, as opposed to what the facts are. What feels like the right answer, as opposed to what reality will support.” – Colbert

Thanks to Gretchen Morgensen of the New York Times we have this story from Neil Barofsky’s truthy expose of Obama’s Treasury Department

“Bailout” covers a lot of ground, running through attempts of the inspector general’s office to ensure that additional rescue programs suggested by the Treasury had safeguards in place to avoid conflicts of interest, collusion and fraud. One battle involved the Public-Private Investment Program, designed to get troubled mortgages off banks’ balance sheets by encouraging private investors to buy them using mostly taxpayer dollars. When the inspector general’s office recommended ways to protect against fraud and to fix other flaws in the program, Mr. Barofsky writes, the Treasury rejected the suggestions, maintaining that they would gut the programs and reduce participation.

And then we learn of the terrible fraud that resulted from Treasury rejecting Mr. Barofsky’s demands: um, yes, well, we don’t. In fact, nobody has made even any serious allegations of fraud in that program, not even Mr. Barofsky.  So was Treasury right and Mr. Barofsky wrong? Of course not! How could that even occur to you? That answer would not feel right, no matter how much pesky fact supports it. And here’s the next topic

Another skirmish involved the department’s ill-conceived loan modification plan, known as the Home Affordable Modification Program. When the Treasury began discussing the program’s outlines, Mr. Barofsky said he became concerned that it would open the door to fraudulent foreclosure rescue schemes, in which large upfront fees could be extracted from desperate borrowers eager to participate in what was supposed to be a free government program. When his office recommended fraud-prevention measures, several were ignored, he writes.

Ok, more like it. And there is a followup paragraph so we can see the juicy fraud with all those upfront fees … well no …

A few months after the modification plan was announced, his office began a preliminary audit of its rollout. “We soon verified what we had suspected,” Mr. Barofsky writes. “Treasury had failed to ensure that the servicers had the necessary infrastructure to support a massive mortgage modification program.” It barely got off the ground, and few homeowners have received the help they hoped for.

We verified what we suspected? We suspected fraud and we found, ah, what we expected – slow paperwork processing.

But what feels like the right answer is that the TARP program was a scandal, so all it needs  is someone to huff and puff and for many readers, and apparently for Ms. Morgensen, that’s enough. If you know that Tim Geithner is a Wall Street lackey and President Obama is his weak, clueless, puppet, then the suspicion of fraud is the evidence of fraud.  Sadly, there are some heretical doubters.

Mr. Barofsky the ex-prosecutor talks of fighting fraud and “Wall Street criminals” and styles his office as a law enforcement agency, complete with guns and badges. Yet the reader should not expect Eliot Ness. Within a week of starting work in December 2008, Mr. Barofsky has fights that are mainly of the bureaucratic type as old as Washington. He grouses for page after page about being left out of the loop as arcane policies are developed, consigned to a basement office that literally stinks. What scofflaws he takes credit for helping to nab are far from Wall Street: an Alabama-based bank, a Tennessee man with a $10 million Ponzi scheme, a San Diego mortgage telemarketer. Jackie Calmes 

Ms. Calmes goes on to point out that Mr. Barofsky, a Bush appointee, was not completely apolitical:

And he does open windows into how Washington works, though not always those he intended.

For instance, like so many actors in the capital, Mr. Barofsky develops backdoor relationships with the offices of friendly Republican lawmakers like Senator Charles E. Grassley of Iowa and Representative Darrell Issa of California, leaking information back and forth to shape news coverage. Then he wonders why Treasury keeps him in the dark?

I have to say, that whenever Mr. Issa’s name comes up, the word “integrity” comes to mind – or maybe not. But for God’s sake, we can’t let mockers and doubters like Ms. Calmes drag us away from the precious storyline about the evil Timmy. Fortunately, Yves Smith steps to the fore to defend Orthodox Progressivism from such lack of faith.

While Hank Paulson at least seemed genuinely to appreciate the need for procedures and checks to protect taxpayers’ interests, Geithner chafed at any interference in catering to every whim of the financial services industry and used every bureaucratic trick at his disposal to undermine Barofsky.

And she [Calmes] repeats the “TARP was paid back with interest” (cleverly including only the banks, when half the TARP funds that went to AIG are still outstanding).