Treasury Statements Omit Projected TARP Losses, GAO Says
The U.S. Treasury Department has highlighted projected gains while omitting estimated losses in press releases about federal bailouts, according to the U.S. Government Accountability Office.
Treasury statements from the past two years that discuss the $700 billion Troubled Asset Relief Program’s profitable investments sometimes include the projected gains for taxpayers, according to a report yesterday from the GAO, a watchdog that works for Congress. The expected costs have been omitted from statements about TARP investments that may be unprofitable, including the government’s stake in insurer American International Group Inc. (AIG), according to the GAO.
“This inconsistent disclosure of lifetime cost estimates raises concerns about the consistency and transparency of Treasury’s press releases and suggests a selective approach that focuses on reporting program lifetime income and not lifetime costs,” according to the GAO report.
The overall projected cost for TARP has declined since the program was authorized in 2008, as banks including Goldman Sachs Group Inc. (GS) and Citigroup Inc. (C) repaid rescue funds at a profit for taxpayers. The Treasury, led by Secretary Timothy F. Geithner, predicted a $70 billion cost as of Sept. 30, down from $78 billion a year earlier, according to the GAO.
Future press releases on TARP investments will link to Treasury’s monthly reports about estimated lifetime costs and gains, Tim Massad, the department’s assistant secretary for financial stability, wrote in a letter to the GAO. The department’s website also includes a daily report on TARP disbursements and income and annual financial statements.
Some Treasury press releases have noted costs to taxpayers. A June statement detailing the government’s exit from Chrysler Group LLC cited the automaker’s repayment of more than $11.2 billion and said that Treasury was unlikely to fully recover the remaining $1.3 billion of funds committed to the company.
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