The knives have come out for Neil Barofsky and his book Bailout. Barofsky spares no one in taking on powerful subjects in his book, detailing the way in which the Treasury Department – regardless of the Administration, and more so under Tim Geithner – displays extreme deference to the banks.

Geithner responded to the book by saying he was “deeply offended,” which is hilarious because that’s one of Barofsky’s running gags, the degree to which Treasury officials constantly tell him how they were “personally offended” by something or other. At one point in the book, Barofsky commiserates with Elizabeth Warren, who tells him that she, too, has personally offended members of the Treasury Department! Funnier still, Geithner’s complaint, that he is erroneously depicted as having worked for Goldman Sachs, isn’t even a part of the book. Barofsky never said that.

Then today, Jackie Calmes delivers a review of Bailout in the New York Times that might as well have come from the Treasury press shop. Yves Smith has a pretty thorough takedown of the review, so I don’t feel the need to go word by word. But I want to focus on Calmes’ rote regurgitation of the “TARP worked” meme:

He refers throughout to the $700 billion bailout, never clarifying that less than $300 billion of that amount went out the door by the time TARP expired; that not a penny went to banks during the Obama administration; and that the big banks repaid taxpayers with interest.

As ugly and flawed as the rescue process was, and as galling as Wall Street’s revived bravado and bonuses can be to most Americans, the fact remains that an economic collapse was averted, and that Main Street is recovering: slowly, but typically so for recessions brought on by credit crises. As Europe’s crisis persists for a fourth year, commentators around the globe have suggested that the Continent should have followed America’s example.

TARP averted a collapse of certain financial firms. I don’t know if Calmes reads economic statistics, but the broader recovery has been stagnant, in large part because the other goals that TARP was supposed to meet, to spur lending and protect home ownership, simply failed as they were shunted to the back of the agenda. So this is the typical method of looking at TARP in a complete vacuum, with a nod to the Rogoff-Reinhart excuse that recovery after financial crises takes a long time. Europe has, if anything, followed the Treasury model of protecting banks rather than the general population, and that has manifested itself in bailouts and austerity programs and brought the continent to the brink of ruin.

The way to keep the rest of this passage correct is to use the appellation “big banks” in referring to who repaid taxpayers, which leaves out AIG, half of whose TARP share remains unpaid. There’s also the fact that a bank that could borrow at nearly zero interest rates from the Fed and loan to the government at 3% cannot help but earn their way back to health, so the use of “repaying” the TARP loans is dubious, if you don’t add that they’re repaying it with government money.

But the hilarious part of this is that, on the same day that the review drops, we learn that hundreds of banks have not repaid TARP, and hundreds more quite literally did so with federal loans.

Of the 707 banks that received taxpayer money from the government’s Troubled Asset Relief Program starting in 2008, also known as TARP, about half have repaid the Treasury.

However, 137 of those banks used a government-loan program to repay their taxpayer debts, according to the quarterly report to Congress of the Office of the Special Inspector General for TARP.

Of the 325 banks still propped up with taxpayer money, 203 have missed dividend or interest payments, with some missing as many as 13 payments since receiving capital injections at the height of the financial crisis, the report said.

Adding to their woes, the dividend that the bailed-out banks are required to pay to Treasury is set to increase to 9 percent from the current 5 percent as early as 2013.
“Those banks are not able to raise the capital that is required to get out of TARP,” said Christy Romero, the special inspector general for the bailout program.

That this comes from a SIGTARP report, Barofsky’s old job, is kind of poetic. The truth is that, even on the confined terms that TARP defenders want to use, their boasts fall short. Only by saying “big banks” repaid TARP can the statement remain true. Hundreds of banks across the country took the taxpayer money and ran.