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Former Tarp Advisor on Bank Bailouts, Libor

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    Former Tarp senior advisor Susan Ochs argues the bank bailouts were successful.

  • Duration 4:07
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Peter Barnes and last dollar on markets now the man who oversaw the -- bail out.

Says he's worried about how big the banks have grown former TARP inspector general Neil the rocky told -- -- and something needs to be done.

Have -- and a lot of different aspects one of them clearly is you had a problem of too big to fail banks that helped drive us into it.

Enormous financial crisis and the government's response was to protect that status quo and in some ways make the banks big 122 point 5% bigger.

-- joining us now is Susan -- former TARP senior advisor and onetime advisor to the treasury.

Susan you know I think we've got some revisionist history going on in some ways in some quarters was the TARP bailout a successor now.

Absolutely.

And in fact if you look at what you -- he says in certain quarters you'll talk about the bank firm and saying that he was necessary it did call us back from the brink of financial Armageddon.

And that it has been successful it actually is gonna turn a profit for taxpayers is looking to the 220 billion dollars.

But one result of the TARP bailout when they got that room as we saw on the HBO movie based on the book that was too big to read.

Is that they made the big banks even bigger -- something need to be done about that now.

Well I think it's a really interesting trend that you're starting to see withstanding while coming out obviously as her as -- stunning comments that he made yesterday and he's been -- -- a lot of other CEOs have said Phil Purcell we heard.

I Dick Parsons who -- a former chairman of Citigroup.

So and they're starting to be some consensus it seems like and certain quarters of the industry.

That the banks are -- today and what specifically that it's time just re separate.

Commercial banking investment banking because they're starting to feel like the business models to start working correctly and and and you see that reflected in the stock market.

And yet we saw JPMorgan they've they swallowed -- five billion dollar trading loss and yet still we're quite problem the quarter that is in part because of their huge size I thought -- was a protection against that kind of meltdown.

That is the argument that that Jamie Dimon makes however again as you go with the go back looking at the valuations and you look that all the big money center banks are trading at -- below tangible book value which is not the case for banks that are just focused on their traditional banking business.

Wouldn't be better if we had investment bankers going to the banks and saying let's come up with a plan on how we chop you up to unlock more value.

Rather than government regulators coming in to say you're too big we need to chop you up.

Even better I think shareholder should be there -- pushing to say we don't think that this models working anymore here to defend each independent.

I'm seeing come.

You're not thinking about your customers in the right way -- having shareholder movement that's trying to get these banks -- how to shareholders do that when main mainly protesters -- stopping get out of it.

Well that's one way there aren't large activist shareholders who have not been shy about pushing other things we decide Yahoo! -- change that was.

Very much driven by shareholder so there are places where show there's really work.

OK now let's can of beer in the Libor Geithner on the hill answering questions about.

An interest rate that really he doesn't control or regulate anyway that's alone didn't thing that track is this just another excuse to go after him because we've they want amount -- anyway -- their mad about the TARP bailout and all that.

Yeah I think -- some of that wrapped into -- I you know there's this long held misperception about Tim Geithner that he is an industry got when he has been a career public servants.

He's not been bidding -- the banks.

He at the time as he laid out in his testimony he mentioned arrested that -- to brief the president's working group on financial markets which includes all the regulatory agencies in the United States.

And -- CFTC at that time opening investigation and if you're Tim Geithner you think okay that's visiting appropriate steps to be taken and now we're gonna let the process work.

He doesn't have regulatory authority as a have been York.

Fat but you do see a difference between the alleged mortgage fraud where banks pushed money on people who couldn't pay -- back was terribly bad of the banks.

Vs the Libor manipulation which.

Affected everyone.

It which is worse.

I think they're they're both pretty bad and I think what's interesting now is that did breach of stress has gone from.

Just the breach of trust between consumers and their banks to the financial community and the banks the financial community -- really mind so much media they're putting one over on mortgage holders but now that they're starting September about the financing thousands of Lola you -- bringing you can't bring into that fool we twice shame on me actually.

All right former talk about as -- and -- good job thank you being with -- safety and some call -- the.

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