Geithner Firing Talk Heats Up w Inspector General's Report

Oct. 26, 2010 - PRLog -- 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,

according to a report by the special inspector general for the Troubled Asset Relief Program.

“In our view, this is a significant failure in their transparency,” said Neil M. Barofsky, the inspector general, in an interview on Monday.

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.

“The American people have a right for full and complete disclosure about their investment in A.I.G.,” Mr. Barofsky said,

“and the U.S. government has an obligation, when they’re describing potential losses, to give complete information.”

The Treasury will include more information about A.I.G. when it issues its own audited financial statement in November.

Because those numbers must pass an auditor’s scrutiny, the loss it reports is likely to grow once again, to more than $5 billion.

Members of Congress who have been critical of the federal bailouts jumped on Monday to commend the special inspector general and challenge the varying numbers.

“If a private company filed information with the government that was just as misleading and disingenuous as what Treasury has done here,

you’d better believe there would be calls for an investigation from the S.E.C. and others,”

said Representative Darrell Issa, the senior Republican on the House Committee on Oversight and Government Reform.

He called the Treasury’s October report on A.I.G. “blatant manipulation”  ...

Mr. Barofsky said he had written to the Treasury secretary, Timothy F. Geithner, in mid-October,

after widespread reports in the news media about the possibility that the Treasury could wind down its position in A.I.G. with just a $5 billion loss.

He recommended that the Treasury correct the October report, perhaps by adding a footnote saying the methodology for calculating its losses had changed.

The Treasury declined.

It sent back a letter saying its methodology for calculating losses had not really changed, although its assumptions ...

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