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

(Free Press, $26)

“If you harbor any doubts about how dysfunctional Washington has become,” Neil Barofsky has a tale for you, said James Pressley in Bloomberg Businessweek. The former inspector general in charge of policing the Troubled Asset Relief Program has written an “angry” memoir describing how two Treasury secretaries and other federal officials foiled his efforts to root out fraud and abuse in the $700 billion program. “The last thing Treasury wanted, judging from this account, was a nosy cop scaring bankers away from TARP funds,” and Barofsky describes an environment hostile from the beginning. Sold as a way to increase lending and help homeowners, TARP instead became a blank check for Wall Street, thanks in part to current Treasury Secretary Timothy Geithner.

This would be a damning narrative if it weren’t full of inconsistencies, said Jackie Calmes in The New York Times. Barofsky portrays himself as a Washington outsider facing down such entrenched insiders as Assistant Treasury Secretary Herbert Allison. But after accusing Allison of threatening him with lifelong unemployment if he didn’t toe the line, he acknowledges that Allison was “trying to be helpful.” While he details his attempts to warn the public of the potential for catastrophic losses from TARP lending, he never mentions that such losses never came about. Nor does he report that only $300 billion of the $700 billion program was ever lent out and that the $300 million was repaid by the banks with interest. The only real blunder Geithner seems guilty of is that he “should have been a lot more conciliatory toward this zealous inspector general, if only to avoid becoming the biggest villain in Barofsky’s morality tale.”

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The most effective arguments in Barofsky’s book target another acronym of the bailout era, said Arthur Delaney in HuffingtonPost.com. The Home Affordable Modification Program, or HAMP, was intended to help struggling homeowners readjust their mortgages, and Barofsky calls it a “disaster,” with some justification. Despite President Obama’s promise that it would help 4 million borrowers, fewer than 1 million have received lasting assistance. Barofsky blames the Treasury for putting banks in charge of the modification process, which they bungled, perhaps deliberately. Last year, the House of Representatives voted to symbolically terminate HAMP, “replacing it with nothing in particular.” Meanwhile, the banks are making record profits, and Main Street is still reeling.