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How Washington Abandoned Main Street

During today's guest spot author, Neil Barofsky, is joining the conversation to talk about his book: Bailout: An Inside Account of How Washington Abondoned Main Street While Rescuing Wall Street. Below find an excerpt from the book and be sure to tune in at 3pm for the full conversation with Neil Barofsky. 


I €� �‚ƒƒ‚was sitting at my desk a†er hours on Wednesday, October 15,2008, when the phone rang. I’d been si†ing through a pile of FBI reports about my newest case—a loathsome ring of predators who werestealing houses out from under home owners who had fallen behind intheir mortgage payments. Looking down at the caller ID, I saw that it readus attorney. Shit, I thought. It was my boss, Mike Garcia, the U.S. attorneyfor the Southern District of New York, and I !gured that either I was introuble or he was going to dump something urgent on me.

“You got a minute?” he asked. “C’mon up.”

As I headed out of my o"ce, I tried to think of who I might have pissedo# enough to warrant getting called to the principal’s o"ce. While I waswaiting for Mike to get o# the phone, he handed me a copy of a statutedescribing the creation of an inspector general’s o"ce for the TroubledAsset Relief Program, the $700 billion bank bailout Congress had passedless than two weeks earlier.



No, I had no idea,” I replied.

He then started describing the new o"ce in detail. It would have tworoles. First, it was going to be a full-edged law enforcement agency, amini-FBI for the TARP, which would try to catch the inevitable criminal fies that would be drawn to the $700 billion in government honey. It would also have an audit function, providing Congress with regularreports on how the Treasury Department was carrying out the bailout.Relieved that I wasn’t in trouble, I half listened while trying to !gureout why Mike was telling me about this new agency. Rumors were swirlingaround the o"ce that with the presidential election just a few weeksaway, Mike, who was a Bush appointee, was about to step down. I thoughtmaybe he was taking the inspector general job and that he might be tryingto recruit me to go with him. I began planning my polite refusal.

“So, you think you’d be interested?” Mike asked, snapping my attentionback.“In what?” I responded, making a mental note to pay closer attentionwhen the boss was talking.

“In the job,” he said.

“What job?” I asked, still not understanding what he was getting at.

He looked exasperated and said, “&e special inspector general job.”

I was stunned. As a federal prosecutor I had been fortunate to investigateand try some remarkable cases, but I sucked at o"ce politics. I had ahard time keeping my opinions to myself, and my aversion to bullshit andhypocrisy occasionally led to an Asperger’s-like bluntness. &at didn’talways endear me to people, particularly some of my recent supervisors.(Months later, Mike explained that was partly why he had recommendedme: “You can be kind of a dick at times, and they needed someone whocould be kind of a dick.”) And although Mike had recently promoted meto lead the o"ce’s newly created mortgage fraud group, he had also passedme over for a supervisory job a couple of years earlier.

Now, out of nowhere, he was asking me if I was interested in a job thathe explained would require a nomination from President George W. Bushand con!rmation by the U.S. Senate. Clearly this job would be a highlysought a†er political appointment for the type of person who aspires tosuch things. Did Mike not realize that I was a nobody? &at I knew almostno one in Washington? More important, did he not realize that I was alifelong Democrat who had recently contributed to the Barack Obamacampaign? Me? A Bush appointee?

It wasn’t just that I couldn’t see how I could possibly get the nomination;I wasn’t interested. I didn’t even really know what an inspector general did. My experiences with IGs, as they were called, were largelylimited to a handful of cases I’d handled back when I !rst started as aprosecutor in 2000. My friend and colleague Mike Purpura used to jokethat the true sign a case was going to prove a colossal waste of time was ifit involved what he referred to as “those three magic letters, O-I-G”—forO"ce of the Inspector General. I started thinking of excuses.

“Is the job in New York?” I asked.

“No, D.C., of course it’s in D.C.,” Mike responded in a tone that madeclear he didn’t subscribe to the old adage that there is no such thing as astupid question.

I explained that the timing really wasn’t right. I was getting marriedin a few months to my !ancée, Karen, for one thing, and I was preparingto try a big case against the lawyer Joseph Collins, who had been chargedin a multibillion-dollar accounting fraud related to the collapsed giantcommodities broker Refco. I’d worked like a rented mule to get the caseindicted. It had become my “white whale,” and I couldn’t imagine walkingaway from it. Not only that, but I was also just getting the mortgagefraud group o# the ground. &ese were some of the most appalling casesimaginable, with predators feasting on struggling borrowers and cluelessbanks while lining their own corrupt pockets. I was looking forward tobringing these criminals to justice. Mike’s face told me that he wasn’t buyingany of my excuses, so I rolled out the big gun.

“And, Mike, you know that I’m a Democrat, right?” I said, pausing fora moment for e#ect, then delivering my coup de grâce. “And just last weekI donated to Obama’s campaign.”

I was sure that would be a deal killer, but Mike persisted.

“I thought of you exactly because of Collins and the mortgage fraudgroup. &ose cases are exactly the types of experiences that the WhiteHouse is looking for. As for your politics, they won’t care; this is a meritappointment.”

I wondered for a moment where Mike had found the unicorns andfairies to hand out those “merit” Bush nominations to Obama-contributingDemocrats.