The Treasury Department has covered up what is probably a $40 billion loss the government took in its efforts to bail out behemoth insurance company AIG, according to the watchdog who monitors the Troubled Asset Relief Program.
The New York Times reports that Neil Barofsky, the special inspector general for TARP, believes a change in accounting practices by the Treasury resulted in the hidden loss. You see, an Oct. 5 report by Treasury projected that it would lose $5 billion on its TARP investment in AIG, down considerably from a previous forecast of a $45 billion loss. A Treasury spokesperson tried to explain the discrepancy to The Times:
An official of the Treasury disputed Mr. Barofsky’s conclusions, saying the department appropriately used different methods for different purposes. He said the smaller loss was a projection of future events, and the larger one was the result of an audit, which includes only realized gains and losses.
The charge follows a late September agreement between Treasury and AIG to disentangle AIG from the government. It also comes a week ahead of the midterm elections. One Republican congressman told The Times that they thought the Treasury report was “blatant manipulation.” Another said the administration had “played fast and loose with the numbers.”
mtaylor [at] observer.com | @mbrookstaylor