A man hired by the government to be its watchdog in the wake of the housing market implosion and the subsequent bank bail-outs is now widely criticism the execution of those bail-outs.
Neil Barofsky, former Special Inspector General for the Troubled Asset Relief Program, in his new book, “Bailout,” says that while the effort was necessary, it was carried out with little oversight and ultimately resulted in bank executives – the ones who caused this crisis – to be held to a much less rigorous standard than the average American homeowner who was suffering as a result.
Our Miami foreclosure defense lawyers know that it’s a widely-held belief that Washington services those special interests ahead of those of the Average Joe and Jane. The reason this book is so noteworthy is because Barafosky had inside knowledge of the inner workings of that bailout, Washington’s relationships with Wall Street and the failures that subsequently ensued.
He is in a unique position to speak out because he no longer holds the job (although he was quite critical of the bailout even at the time it was happening), but he’s also not a politician, bound to any special interest groups or worrying about raising enough money for an election. He’s simply calling it straight – and it’s not a pretty picture.
Barfosky served in his position from late 2008 until March 2011. The bailout, he concedes, was necessary to prevent “economic Armageddeon.” If the banks failed, we would have likely slipped into a Depression.
The problem is that when that money was doled out, there were very few strings attached to it. There were no apparent conditions or any real effort made by the government to hold these companies accountable. For example, AIG, with billions in taxpayer money, paid lavish bonuses to its staff (which were widely criticized at the time). But the government also failed to negotiate lower payouts to the company’s trading partners.
All of this would be outrageous under any circumstances, but what makes it all the more appalling is that homeowners weren’t given the same kind of leniency.
In fact, HAMP, or the Home Affordable Modification Plan, would have been a great answer to this – if it had helped more than the 900,000 it has. The $50 billion program had pledged to help 4 million people avoid foreclosure by helping to work out mortgage loan modifications with loan servicers. Barofsky says the problem is that the program isn’t well-managed, which essentially meant it was controlled in great part by the the banks.
Government officials have been quick to snap back by asking Barofsky if he could have come up with a better solution. He counters there was no shortage of recommendations he made in order to tighten the controls on the bailout money.
But the whole ordeal just underscores what our Miami foreclosure lawyers have been saying for years: You can’t go through this process alone. The fact is, even those government agencies and programs intended to help homeowners won’t always go to bat for you the way an experienced foreclosure defense lawyer will.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.