Bailed-out banks in worse shape now than before they took the taxpayer cash?

I know that’s a shocking concept, but it’s one professed by Neil Barofsky, senior fellow at New York University and former special inspector general of the $700 billion Troubled Asset Relief Program. The latest Barron’s discusses Barofsky’s recent public statements about the banks.

Barofsky, it turns out, believes that the banking system today is in an even more parlous state than it was before taxpayers shelled out $417 billion to rescue the financial system from ruin and before the Federal Reserve expanded its balance sheet to more than $3 trillion from just $850 billion in 2007, before the financial crisis got into full swing. By its own reckoning, the Treasury faces a loss of $20 billion to $60 billion from the TARP program.

“It’s foolish to believe we’re not on a path to another crisis,” Barofsky contended. Given that banks are bigger now than when they were bailed out and are still deemed “too big to fail,” he said, “I would argue the situation has been made worse.”