It must have been a nightmare for Neil Barofsky, former Inspector General at the Treasury Department where he’d looked after TARP during the financial crisis. He was on CNBC’s Squawk Box Wednesday morning to hawk his new book, when all heck broke loose.

TARP (Troubled Asset Relief Program) was the most reviled law in recent memory, but Congress passed it anyway and President George W. Bush signed it in October, 2008. With its original limit of $700 billion, later reduced to $475 billion, it was much smaller than what Treasury Secretary Hank Paulson had tried to foist on the country that calamitous September. He’d walked into the Capitol with a list of demands—unlimited powers to hand unlimited amounts of taxpayer money to whomever he wanted to—and threatened that the whole world would collapse if his demands weren’t met immediately. When they weren’t met immediately, markets fell off a cliff, and Paulson’s world of finance appeared to come to an end. So Congress approved the more limited TARP, and Barofsky was nominated in November to keep his eyes on it.

So it’s time to sell his book on that episode. Hence, his appearance on CNBC. The theme: did the government turn its back on Main Street in the wake of the financial crisis on Wall Street? After the host Becky Quick introduced the book, Barofsky embarked on his spiel, that his job had been to put protections in place, chase down loopholes, and look for ways that banks could “criminally profit” from the bailout. But when he identified issues, the response “was always the same”: don’t worry, “we can trust the banks.” Indicative, he said, of the Treasury’s “deference towards the banks.”

“The problem with that argument is….” said Quick and launched her defense of TARP, of how it cost “only” $60 billion, that the banks paid back every dime plus interest, that the Treasury actually made money on them. “Wall Street made good on its side of the bargain,” she said.

Barofsky responded, Steve Liesman cut him off, words were picked apart, “catastrophic losses” got twisted around. They interrupted each other and pointed fingers and talked all at once. Clearly, CNBC had decided to demolish his book (Barofsky’s acidic post-CNBC tweets and the CNBC video clip).

But there was one thing that Barofsky didn’t say, but that should have been said: TARP, despite its mind-boggling size, was puny and practically irrelevant compared to the many trillions—how many trillions exactly is still being argued over—the Fed printed and handed out through a variety of programs, and the money started flowing to banks, and not only to American banks but to foreign banks, and to industrial companies like GE and to just about everybody on or off Wall Street who was well enough connected. With this money, they acquired assets and drove up their value. The banks ended up with more free money from the Fed than they knew what to do with, but instead of making low-cost loans, they bought treasuries and other assets, and they made profits not by doing what a bank should be doing but by benefiting from the Fed’s largesse. And they paid out record bonuses.

The largest banks, the prime beneficiaries, were eager to buy back the preferred stock and warrants they’d issued to TARP because it was expensive money compared to what the Fed was handing out, which was free. Thus, the Fed had done what Hank Paulson couldn’t bamboozle Congress into letting him do, namely unlimited funds to any entity, including his own Goldman Sachs. And in doing so, the Fed had bailed out TARP.

TARP wasn’t large enough to prop up the house of cards that these mega-banks had become. It wasn’t large enough to even bail out Citi by itself. Had the Fed not stepped in with its trillions, the banks would have blown through the TARP billions in no time, and then that would have been it. The “catastrophic losses” mentioned on the show would have been reality.

However, there were casualties. One of them was capitalism. The Fed had preserved rotten-to-the-core banks that should have collapsed—or rather it had bailed out stockholders, bondholders, and counterparties. Now these banks are even larger, and the creative destruction of capitalism, and thus capitalism itself, has been replaced by the Fed’s will and its printing press.

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