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IG Claims Obama Hid $40B In AIG Losses

Discreetly tucked away in the ‘Business Day’ section of the New York Times:

Treasury Hid A.I.G. Loss, Report Says

By MARY WILLIAMS WALSH
October 26, 2010

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.” …

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…

Isn’t it funny how the Democrats and the Obama administration keeps changing the metrics by which things are measured to suit their "purposes" at the moment? (Cf. the definition of a ‘recession.’)

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.

Why should the Treasury step on the headlines that the administration so carefully put out just in time for the midterm elections?

It sent back a letter saying its methodology for calculating losses had not really changed, although its assumptions had. For instance, it based the values of several future transactions on the current price of A.I.G.’s common stock. The letter, signed by Timothy G. Massad, the acting assistant secretary for financial stability, said this reflected the fact that a crucial component of its exit strategy would be the exchange of preferred for common stock.

Mr. Barofsky said the government failed to account for the volatility of A.I.G.’s common stock. A relatively small portion of the company is publicly traded, and that portion will be soon diluted further

He said the Treasury’s statements tended to contribute to a “widespread, but mistaken, belief that TARP is at or near its end.”

Again, this was exactly the propaganda point Mr. Obama and the Democrats wanted the electorate to believe. So what is the problem?

As inspector general, Mr. Barofsky has extensive powers of investigation but no enforcement power.

Of course not. Congress saw to that.

Still, we may be living in the past, but $40 billion dollars seems like a lot of money to us. You would think even Congress would be interested in such a loss being hidden away via a bookkeeping gimmick.

Meanwhile, if Mr. Barofsky’s report is accurate, and the Obama administration was willing to lie and cover up for ‘big insurance,’ and the evil Wall Street bankers – what else are they willing to lie about?

Of course, we have seen the very contorted reporting about the costs of bailing out GM and Chrysler, and the highly misleading claims that GM had paid back their government loans.

We have also observed how the administration seems to manipulate the new jobless numbers, quietly revising them upward week after week. And even Gallup has begun to openly wonder the overall unemployment rate isn’t far higher than is being reported.

Similarly, some of beginning to suspect that we have been mislead on the current rate of inflation. And we won’t even mention their questionable numbers on illegal aliens and deportations.

This isn’t what we were led to expect from the most transparent administration in history. We were promised ‘hope and change,’ and we seem to be getting ‘hoax and claims.’

This article was posted by Steve on Tuesday, October 26th, 2010. Comments are currently closed.

5 Responses to “IG Claims Obama Hid $40B In AIG Losses”

  1. GetBackJack says:

    The 1998 Financial Coup d’etat orchestrated around a housing bubble was nothing compared to the 2009 Housing Bubble Coup d’etat.

    http://www.dunwalke.com/16_Financial_Coup_d-Etat.htm

  2. confucius says:

    Let’s not forget who started TARP–i.e. Bush and Paulson.

    Prosecute them all.

  3. tranquil.night says:

    Well it begins with congressional investigations acting on all these IG watchdog reports. Between Michelle and Steve we have a small encyclopedia of real and suspected breaches. We’re going to be watching Issa. I’m sure any one of us amateur proffesionals are more than willing and capable to work with you to do what’s right. Ditch the beltway Washington staffers and lobbyists.

  4. mr_bill says:

    This is precisely the kind of accounting shenanigans that got Arthur Anderson, Enron, et al in deep water. Sooner or later the house of cards will come crashing down, it always does.

  5. canary says:

    Why did the New York Times say the IG can’t make arrests, when they can.

    My understanding is that IG’s carry guns, have authority as the FBI, and they make arrests.

    I found this article when googled if the IG can make arrests, and this shares the opinion I have. I just think you can’t arrest the President. So, certainly, it’s impeachable. But, will not take the fall. His entire life &
    presidency is to let others take the fall. He always has someone to blame. Grassley used to be on the whistle-blower committee (may still be), so at least perhaps this IG will be protected, though he will have to look behind his back.
    http://www.rightpundits.com/?p=6139

    here’s another source the IG can make arrests. I only took the part from Title 5 of the Code of Federal Regs that says they can carry guns & make arrests, but the Attorney General apparently has say, and we know how that does.

    TITLE 5 App. > INSPECTOR > § 6
    Inspector General, in carrying out the provisions of this Act, is authorized—
    n officer having a seal;
    (6)…(7)…(8) ..(9)… (d) For purposes of the provisions of title 5, United States Code, governing the Senior Executive Service, any reference in such provisions to the “appointing authority” for a member of the Senior Executive Service or for a Senior Executive Service position shall, if such member or position is or would be within the Office of an Inspector General, be deemed to be a reference to such Inspector General.
    (e)
    (1) In addition to the authority otherwise provided by this Act, each Inspector General appointed under section 3, any Assistant Inspector General for Investigations under such an Inspector General, and any special agent supervised by such an Assistant Inspector General may be authorized by the Attorney General to—

    (A) carry a firearm while engaged in official duties as authorized under this Act or other statute, or as expressly authorized by the Attorney General;

    (B) make an arrest without a warrant while engaged in official duties as authorized under this Act or other statute, or as expressly authorized by the Attorney General, for any offense against the United States committed in the presence of such Inspector General, Assistant Inspector General, or agent, or for any felony cognizable under the laws of the United States if such Inspector General, Assistant Inspector General, or agent has reasonable grounds to believe that the person to be arrested has committed or is committing such felony; and
    (C) seek and execute warrants for arrest, search of a premises, or seizure of evidence issued under the authority of the United States upon probable cause to believe that a violation has been committed.

    http://www.law.cornell.edu/uscode/html/uscode05a/usc_sec_05a_01000006—-000-.html

    The Washington Post: Education Department buying 27 shotguns
    By Valerie Strauss | March 11, 2010

    Why is the Education Department purchasing 27 Remington Brand Model 870 police 12-gauge shotguns (all new, no re-manufactured products, thank you)?

    The guns are to replace old firearms used by Education’s Office of Inspector General, which is the law enforcement arm of the department.

    Here’s a statement from the office in response to a question about why need 27 shotguns with a 14-inch barrels:

    “The Office of Inspector General is the law enforcement arm of the U.S. Department of Education and is responsible for the detection of waste, fraud, abuse, and other criminal activity involving Federal education funds, programs, and operations. As such, OIG operates with full statutory law enforcement authority, which includes conducting search warrants, making arrests, and carrying firearms. The acquisition of these firearms is necessary to replace older and mechanically malfunctioning firearms, and in compliance with Federal procurement requirements. For more information on OIG’s law enforcement authority, please visit their Web site at : http://www.ed.gov/oig”

    You can find, here, a list of reports on fraud cases the office has worked on for the last decade.

    Here’s a link to an 11-page document from the Department of Justice with guidelines for the Offices of Inspector Generals within federal government department that have been given law enforcement authority. It provides detail about firearm training is to be carried out and under what circumstances authorized personnel can engage in law enforcement activities.

    Added: Mar 08, 2010 10:39 am
    The U.S. Department of Education (ED) intends to purchase twenty-seven (27) REMINGTON BRAND MODEL 870 POLICE 12/14P…

    Place of Delivery: U.S. Department of Education Office of Inspector General

    The required date of delivery is March 22, 2010. Interested sources must submit detailed technical capabilities and any other information that demonstrates their ability to meet the requirements above, no later than March 12, 2010…

    Place of Delivery: U.S. Department of Education Office of Inspector General

    http://voices.washingtonpost.com/answer-sheet/education-secretary-duncan/ed-department-buying-27-shotgu.html


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