A shocking (or not so shocking) report released by the special inspector general for TARP yesterday shows that the Treasury, which originally estimated taxpayer losses in the AIG bailout at $5 billion, intentionally hid $40 billion more in additional losses.
The way this was done, according to the report, was by abandoning its "usual method for valuing investments." There's a word for that, it's called fraud. Enron and Worldcom also abandoned their usual method for valuing investments before the companies collapsed and their executives went to jail. In fact, had a CEO and CFO signed off on an annual report (in accordance with Sarbanes Oxley) with this information, they would be facing a criminal investigation.
So why not now?
Because, it's the government. To those who are surprised by these developments, keep in mind that the Treasury is run by Tim Geithner. Geithner couldn't even get his tax payments correct let alone the calculated cost of a $182 billion bailout. It's refreshing to know that the government could once again lie about such a large "investment" and the story ends up in the back pages of our media.