In his quarterly report to Congress, Neil Barofsky, the special inspector general for the trouble asset relief program (TARP) says: "The problems that led to the last crisis have not yet been addressed, and in some cases have grown worse."
According to an article published yesterday by National Public Radio (NPR), Barofsky's report said:
"Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car," Barofsky wrote.
Here are a few more quotes from NPR:
The (financial) institutions that were deemed "too big to fail" have grown larger and failed to restrain the lavish pay for their executives...the banks still have an incentive to take on risk because they know the government will save them rather than bring down the financial system.
This sounds like a serious conflict of interest. As such, whenever there is a lot of money floating around, stretched resources to oversee the funds and conflicts of interest, you can bet fraud is around the corner. In this regard, here's more from NPR's article:
Barofsky also said his office is investigating 77 cases of possible criminal and civil fraud, including crimes of tax evasion, insider trading, mortgage lending and payment collection, false statements and public corruption.
One case concerns apparent self-dealing by one of the private fund managers Treasury picked to buy bad assets from banks at discounted prices. A portfolio manager at the firm apparently sold a bond out of a private fund, then repurchased it at a higher price for a government-backed fund. A rating agency had just downgraded the bond, so it likely was worth less, not more, when the government fund bought it. The company is not being named pending the outcome of Barofsky's investigation.