Bailout cop Barofsky back in the spotlight

NEW YORK (CNNMoney) -- The Obama administration just can't get rid of Neil Barofsky.

From December 2008 to March 2011, Barofsky served as the official watchdog for the Treasury Department's financial crisis response. (His official title was Special Inspector General for the Troubled Asset Relief Program, or TARP). In that role, he made headlines with his scathing criticisms of the effort and its alleged deference to Wall Street interests.

Now, he's back with a new book on his experiences -- entitled Bailout -- and the criticisms are even louder.

"When providing the largest financial institutions with bailout money, Treasury made almost no effort to hold them accountable, and the bounteous terms delivered by the government seemed to border on being corrupt," Barofsky writes.

"Meanwhile, an entirely different set of rules applied for homeowners and businesses that were most assuredly small enough to fail."

Barofsky told CNNMoney that he's "not suggesting that protecting against the collapse of the financial system didn't benefit Main Street," but that there have been grave problems in the bailout's execution.

In the book, Barofsky documents his clashes with Treasury officials over the transparency of the effort, calling for controls to track the billions of dollars funneled to financial institutions and to ensure that the money was used as it had been intended by Congress.

He also rails against the generous terms of the bailout for insurance giant AIG (AIG, Fortune 500), to which the government at one point committed over $180 billion. He calls out the lavish bonuses AIG later paid to its staff and the government's failure to negotiate lower payouts to the company's megabank trading partners.

Federal Reserve chairman Ben Bernanke has called the AIG rescue "distasteful" but necessary. The government will ultimately make a $15.1 billion profit from the effort, the Government Accountability Office said in May.

Also a target of criticism from Barofsky is the government's $50 billion Home Affordable Modification Plan, or HAMP, intended to help eligible homeowners avoid foreclosure by facilitating mortgage modifications with loan servicers.

Barofsky charges that HAMP was badly mismanaged and was effectively controlled by the financial sector. As of January, it had helped just 910,000 homeowners -- a far cry from the promised 4 million.

Mixed in throughout the book are colorful anecdotes meant to support Barofsky's contention that officials in Washington are captured by Wall Street interests.

In an interview with CBS this week, Treasury Secretary Tim Geithner said he was "deeply offended" by this claim.

"[I]f you think that what we did was ineffective, were there better alternatives?" Geithner said.

"Look at what Europe's going through now and ask yourself, can you find an example of something as effective and powerful as the strategy we designed over that period of time? I don't believe you can find an example of that."

A Treasury spokesman declined to comment beyond Geithner's remarks.

Barofsky, now a senior fellow at the New York University School of Law, told CNNMoney that there is "no shortage of recommendations that I made, but the sad thing is, it never changes."

"There's this real sense of palpable anger out there about the bailout and about the financial system," Barofsky said. "This anger is sometimes mocked and sometimes marginalized, from the Tea Party to Occupy Wall Street, but with this book, I've tried to give those folks some ammunition."

As for his next move, he joked, "I'm going to work at Goldman Sachs (GS, Fortune 500)."