How much money did U.S. taxpayers lose when funds from the Troubled Asset Relief Program (TARP), the $700 billion bailout passed in the wake of the 2008 Wall Street meltdown, were used to rescue the insurance giant AIG? The Treasury Department’s reports on TARP say the loss was a measly $5 billion. But the inspector in charge of keeping the department honest says the only way to arrive at that figure is to fiddle with the books.
In an October report, Neil Barofsky—the inspector general assigned to monitor TARP—accused the Treasury Department of quietly changing its accounting methods to make TARP losses seem far smaller than they actually were. In previous reporting, the department had estimated that the recapitalization of AIG would result in a $45.2 billion loss. The downward revision to just $5 billion did not reflect a real change in the program’s financial expectations; it stemmed from a change in the previously published accounting methodology, “on the assumption that the recapitalization will go exactly as planned.”
According to Barofsky’s report, the Treasury Department “abandoned” the published methodology and failed to disclose the change. As a result, the inspector general says, the department’s self-reporting “fails to meet basic transparency standards.”