Did Treasury Hide $40B In AIG Losses?
Maybe Treasury Secretary Tim Geithner should have been in the financial services industry after all. According to SIGTARP Inspector Neil Barofsky, it looks like Geithner & Co at Treasury played fast and loose with accounting rules when tallying up AIG losses, amounting to $40 billion!
From the most recent SIGTARP report:
"The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments...In early October, the Treasury issued a report predicting that the taxpayers would ultimately lose just $5 billion on their investment in A.I.G., a remarkable outcome, since the insurance company was extended $182 billion in taxpayer money in the early months of its rescue. The prediction of a modest loss, widely reported as A.I.G., the Federal Reserve and the Treasury rushed to complete an exit plan, contrasted with an earlier prediction by the Treasury that the taxpayers would lose $45 billion."Um, doesn't this sound a little bit like Enron accounting? Frankly, I'm not surprised, because Geithner shares another of the financial industry's worst qualities: exaggerating successes. Recently, Geithner said in the Washington Post that TARP was "the most maligned yet effective government program in recent memory" and Geithner didn't bother to correct Bloomberg's misleading report of Uncle Sam's 8.2 percent return earned on TARP.
As my colleague Eric Schurenberg points out here, that return sounds just fine and dandy, except if you include the hundreds of billions the government spent on nationalizing Fannie Mae and Freddie Mac, or the Fed's various measures that pumped trillions of dollars into the economy. Geithner asks us to "look beyond" those pesky details!
If Geithner did work on Wall Street and these types of shenanigans were revealed, maybe his CEO would have already thrown him under the bus and he would be pounding the pavement. Luckily for him, our CEO-in-Chief (aka President Obama) seems happy to look the other way and allow him to keep his job...<sigh>
Image by Flickr User jimmiehomeschoolmom, CC 2.0
