When flipping a coin to decide an outcome, it’s usually “Heads, I win; tails, I lose” or “Heads, I win; tails, you win.” The dishonest saying is: “Heads, I win; tails, you lose.”
By the late 1980s, the following saying developed regarding banks with losses protected by the government: “Heads, I win; tails, the taxpayer loses.”
Neil Borofsky, the Special Treasury Department Inspector General overseeing the Troubled Assets Relief Program, said in January 2010 that the banks have a new saying: “Heads, I win; tails, the government will bail me out.”
Wikipedia: Neil Barofsky
Neil M. Barofsky (b. 1970) is a former Assistant United States Attorney for the Southern District of New York and currently the Special Treasury Department Inspector General to oversee the Troubled Assets Relief Program. Barofsky completed his undergraduate studies at the University of Pennsylvania, earning a bachelors degree in economics from Wharton School of Business. He graduated with honors from New York University Law School in 1995.
15 June 1949, Northwest Arkansas Times (Fayetteville, AR), “AEA Accused Of Increasing School Taxes,” pg. 1, col. 4:
“It’s just a case of heads the education forces win and tails the taxpayers lose.”
Housing and urban development act of 1965. Hearings, Eighty-ninth Congress, first session, on H.R. 5840, and related bills
By United States. Congress. House. Committee on Banking and Currency. Subcommittee on Housing.
Washington, DC: U.S. Government Printing Office
It is heads the contractor wins and tails the taxpayers lose.
Intellectual property rights and U.S. competitiveness in trade
By Helena Stalson, NPA Committee on Changing International Realities
Washington, D.C. : National Planning Association, Committee on Changing International Realities
The firm is, in essence, allowed to gamble with the taxpayers’ money in a game of “heads I win, tails the taxpayer loses.”
19 February 1989, Chicago (IL) Tribune, “Once a pariah, predicter of S&L crisis wins accolades Now, Bert Ely sees trouble ahead for banks,” business section, pg. 4:
“It is a `heads I win, tails the taxpayer loses’ proposition,” Ely says.
By David Frum
New York, NY: BasicBooks
It was no Democratic congressman who signed the Garn-St. Germain Act of 1982 that sent the thrifts off to the heads-I- win-tails-the-taxpayer-loses casino.
Asia under siege:
How the Asian miracle went wrong
By Ranjit Gill
According to him, this then gives the banks an incentive to “play a game of heads I win, tails the taxpayer loses”.
October 2, 2008
Heads They Win, Tails You Lose: Why the Bailout Plan Will Fail U.S. Taxpayers
By Shah Gilani, Contributing Editor, Money Morning
Sunday, March 1, 2009
Heads, AIG wins; tails, the taxpayers lose.
“Heads I win, Tails the Taxpayers Lose”: Toxic Asset Rip-Off
by Hans Bader
March 23, 2009 @ 11:30 am
My $10 Million Bonus Might Lose Out to Pay Police: David Reilly
Commentary by David Reilly
June 10, 2009 (Bloomberg)—I deserve a $10 million bonus.
Not that the Wall Street compensation model doesn’t need retooling. It is a basic tenet of management, and human nature, that if you want to change behavior you change the incentives. And the financial crisis has made clear that we need to change behavior on Wall Street, where executives were paid for failure and risk-taking was defined as heads I win, tails the taxpayer loses.
July 14, 2009, 1:19 PM EDT
The Cody Word home page
Goldman Sachs vs America - heads I win, tails you lose
September 6, 2009
TARP: Heads I Win! Tails the Taxpayer’s Pay For It!
Neil Barofsky, Special Inspector General overseeing the TARP program.
Mr. Barofsky stated that some of the biggest banks and institutions, with the Governments encouragement, have gotten bigger, and he has heard the moral hazard “HEADS I WIN, TAILS THE TAXPAYER’S PAYS FOR IT” and admits that with TARP we have not moved away from this attitude. He states that when TARP was announced the whole purpose was a statement that we aren’t going to let our large financial institutions fail and with that “WE MAY BE IN A FAR MORE DANGEROUS PLACE THAN WE WERE A YEAR AGO!”
New York (NY) Times
Financial Russian Roulette
By PAUL KRUGMAN
Published: September 14, 2008
But the consequences of those rescues are making officials nervous. For one thing, they’re taking big risks with taxpayer money. For example, today much of the Fed’s portfolio is tied up in loans backed by dubious collateral. Also, officials are worried that their rescue efforts will encourage even more risky behavior in the future. After all, it’s starting to look as if the rule is heads you win, tails the taxpayers lose.
Saturday, January 30, 2010
TARP Cop: Some Bailout Goals Still Unmet
The government’s top bailout cop said Sunday that more than a year after the financial crisis hit, many of the goals of Washington’s $700 billion bank rescue program remain unmet and that policymakers still have not addressed fundamental problems that triggered the crisis, leaving the financial system vulnerable to another collapse.
In a 224-page quarterly report to Congress, Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program [TARP], acknowledged that TARP had stabilized the financial system. But he said that it has so far failed to restore consumer and business lending and to significantly prevent home foreclosure.
•” To the extent that institutions were previously incentivized to take reckless risks through a ‘heads, I win; tails, the Government will bail me out’ mentality, the market is more convinced than ever that the Government will step in as necessary to save systemically significant institutions. This perception was reinforced when TARP was extended until October 3, 2010, thus permitting Treasury to maintain a war chest of potential rescue funding at the same time that banks that have shown questionable ability to return to profitability (and in some cases are posting multi-billion-dollar losses) are exiting TARP programs.”
Neil Barofksy’s Latest Musing On TARP
Posted by Yaël Bizouati, Feb 01, 2010, 11:30am
SIGTARP’s Neil Barofsky released the agency’s quarterly report today and $700 billion later, this is where we stand: the program not only didn’t help anything but had an opposite effect; TARP money is being used to investigate banks’ TARP-related insider trading and Geithner is full of crap.
Along the same lines, institutions that were previously incentivized to take reckless risks through a “heads, I win; tails, the government will bail me out” mentality, are even more convinced than ever that the government will step in as necessary to save them. And regarding bonuses, “there has been little fundamental change in the excessive compensation culture on Wall Street.”
New York City • Banking/Finance/Insurance • (0) Comments • Monday, February 01, 2010 • Permalink