In a scathing 338-page report released today, a federal watchdog exposes the failure of the 2008 Troubled Asset Relief Program (TARP) bailout and suggests Treasury Department officials engaged in a politically motivated attempt to hide losses at bankrupt insurance giant AIG with “manipulated” data.
“Treasury should have disclosed that it had changed its valuation methodology and should have published a side-by-side comparison of its new numbers with what the projected losses would be under the auditor-approved methodology that Treasury had used previously and will use in the future,” says the report from the office of Neil Barofsky, special inspector general known as SIGTARP. “This conduct has left the Treasury vulnerable to charges it has manipulated its methodology for calculating losses to present two different numbers depending on its audience.”
One set of numbers about AIG losses was released in “early October as part of a multifaceted publicity campaign touting the positive aspects of TARP,” the report says, while a second set of audited numbers was provided to the GAO for a November release. The report also describes the administration’s mortgage-relief program as “a cynical attempt to define success as failure.” TARP has enriched the financial sector while the policies of the Obama administration and Treasury Secretary Timothy Geithner have failed to stimulate economic recovery, the Barofsky report says:
“While large bonuses are returning to Wall Street, the nation’s poverty rate increased from 13.2% in 2008 to 14.3% in 2009, and for far too many, the recession has ended in name only. . . .
“Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of more than 2,000 small businesses, thereby potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all without sufficient consideration of the decisions’ broader economic impact. . . .
“[T]he most specific of TARP’s Main Street goals, ‘preserving homeownership’ has so far fallen woefully short, with TARP’s portion of the Administration’s mortgage modification program yielding only approximately 207,000 ongoing permanent modifications since TARP’s inception, a number that stands in stark contrast to the 5.5 million homes receiving foreclosure filings and more than 1.7 million homes that have been lost to foreclosure since January 2009.”
One economics blogger said: “If after all this disclosure Geithner does not resign, well, America truly will have the Treasury Secretary, not to mention administration, it deserves.”
Barofsky was one of the inspectors general featured in “The War on Watchdogs,” in the September issue of The American Spectator.