"Running Afoul of Obama's Adding Machine" - Barofsky, Lifelong Demoocrat

[WhiskeyGirl]

PRESIDENT GEORGE W. BUSH appointed the lifelong Democrat to the newly created inspector general's post in 2008. Barofsky's mission: "To advance economic stability by promoting the efficiency and effectiveness of TARP management, through transparency, through coordinated oversight and through robust enforcement against those, whether inside or outside of government, who waste, steal or abuse TARP funds." And until last week, the dogged Sig was considered to be one of the good guys.

"He has the capacity and intellect to dig into things, and to exercise independent judgments. Which is really lacking [in the federal government] in general,"Rep. Alan Grayson, a Florida Democrat, told Mother Jones magazinein 2009.

Then Barofsky dared give the Treasury a thrashing in print a week before the midterm election for its management of TARP. He said that the bailout was falling far short of many of its goals, like preserving home ownership and stimulating the economy. The report's timing was purely coincidental. Sigtarp by law must prepare one for Congress after every quarter. And the paper's revelations about TARP's weak impact on the rate of foreclosures and the economy wasn't exactly breaking news. The bailout long has been a sore spot with voters, who are preparing to turn on Democratic congressional incumbents. What roiled the White House was that the report generated negative articles because Barofsky wrote the executive summary like an indictment. Oval Office thanes had hoped for a PR-style accentuation of the positive and minimization of the negative.

Sigtarp faulted the Treasury for overreliance on self-reporting by TARP recipients on their use of government funds. The special inspector's office recommended direct Treasury oversight to assure that the cash isn't being wasted or stolen. And it faulted a recent Treasury projection showing that taxpayers likely will profit from their stake in insurance giant AIG. The Treasury employed pro forma accounting that projected future gains based on current prices for AIG stock and representations from AIG that it will exit the TARP program sooner than expected. Previous Treasury estimates, including one last March, used a different methodology—one approved by its auditors-- that predicted a $45.2 billion loss from AIG. Sigtarp said that the Treasury, in the name of transparency, should have compared the pro forma and audited numbers.

Carry this thinking to its logical conclusion and you can appreciate why the White House argues that Obamacare will reduce the deficit, that higher taxes on the rich will spur growth and that green investments will result in hundreds of thousands of jobs. Free Jeff Skilling! Build a monument to Ken Lay! Enron-style accounting is back from the grave and living happily at 1600 Pennsylvania Avenue.

more here http://online.barrons.com/article/SB50001424053111904757804575576510791797970.html?mod=BOL_twm_col

Why doesn't Enron style accounting go out of style?  What happened to common sense?

For some reason, the super global rich, foreigners, and global corporations keep getting richer, and I am inclined to believe that they do not pay American  taxes on the wealth they make, compared to the taxpayer money politicians in Washington keep sending their way! 

[WhiskeyGirl]

A recent report from Neil Barofsky, the special inspector general for the Trouble Asset Relief Program (TARP) in the Treasury Department, says it all: Americans have “entirely legitimate concerns about the lack of transparency, program mismanagement and flawed decision-making processes that continue to plague the program.”

Under President Barack Obama and Treasury Secretary Timothy Geithner, the department’s management of TARP has made a mockery of the Freedom of Information Act (FOIA), even as the program has clearly failed to accomplish its stated purposes.


Read more at the San Francisco Examiner: http://www.sfexaminer.com/opinion/Examiner-Editorial-TARP---Obamas-black-hole-at-the-Treasury--106280539.html#ixzz13qlwAhmj

What happened to sunshine?  Transparency?

That should be no surprise. Barofsky’s blistering report ticks off a list that would make readers’ heads spin: “When Treasury refuses for more than a year to require TARP recipients to account for the use of TARP funds, or claims that Capital Purchase Program participants were ‘healthy, viable’ institutions knowing full well that some are not, or when it provides hundreds of billions of dollars in TARP assistance to institutions, and then relies on those same institutions to self-report any violations of their obligations to TARP, it damages the public’s trust to a degree that is difficult to repair.”

A very real question is whether Obama, Geithner or their Treasury accomplices care about repairing public trust. Bloomberg News said it asked in a January 2009 FOIA request to the Treasury for information on $301 billion in securities owned by Citigroup Inc. that the government had agreed to guarantee. The department gave Bloomberg 560 e-mails so heavily redacted that the legible messages are limited to those saying things like, “Did you just try to call me?” and “Monday will be a busy day!”

Why shouldn't Americans know about where their money is going?  Who's using it?  How much goes to fund terrorism?

Read more at the San Francisco Examiner: http://www.sfexaminer.com/opinion/Examiner-Editorial-TARP---Obamas-black-hole-at-the-Treasury--106280539.html#ixzz13qm6fXWg

Fraud, waste, and financial abuse on steroid?  Will these frauds, wasters, and abusers ever go to jail?  Serve time?  Pay meaningful fines?

Time to abolish the Fed?

[WhiskeyGirl]

The US Treasury plans to transform its TARP investment in AIG by converting $49 billion worth of preferred shares into 1.7 billion shares of common stock. As a result of this swap, the government’s ownership share in the company will jump from 79 percent to about 92 percent.

Barofsky said that the government’s calculation of the value of its holdings do not present a valid picture of the Treasury’s position, because so little of AIG’s common stock is publicly traded. As a result, the US government will likely be unable to sell its stock in the company without dramatically reducing the price.

The report compares the economic hardship facing the American people to the bonanza bestowed on the biggest Wall Street banks, saying, “There is no question that the dramatic steps taken by Treasury and other Federal agencies through TARP and related programs were a success for Wall Street. Those actions have helped garner a swift and striking turnaround, accompanied by a return to profitability and seemingly ever-increasing executive bonuses.”

What happened to Obama's concern for Main Street?  Those Wall Street bankers make millions, not $200,000 like the folks on Main Street.  An Obama wants to tax Main Street?  At the same time keep the taxpayer and Federal Reserve feed trough open for Wall Street, super rich bankers and businesses, and foreigners?

Far from reversing the distress in the housing market, some types of foreclosure are now more prevalent than ever. The report notes that at the present rate, the number of bank repossessions will be 19 percent higher in 2010 than last year.

“Treasury’s claim that ‘every single person’ who participates in Hamp gets ‘a significant benefit’ is either hopelessly out of touch with the real harm that has been inflicted on many families or a cynical attempt to define failure as success,” the report concludes.

Barofsky’s findings underscore the basic fact that the bank bailout, marketed by the Obama administration as a measure to alleviate popular economic hardship from the economic downturn, has served only to funnel hundreds of billions of dollars into the balance sheets of the banks.

http://www.wsws.org/articles/2010/oct2010/tarp-o29.shtml

Did Obama have a teleprompter when he worked as a community organizer?

[WhiskeyGirl]

To make matters worse, J.P. Freire of the Washington Examiner discovered that the Treasury has hired outside consulting firm Phacil to help -- precisely with minimizing the data disclosed through FOIA requests:

    Officials at the Treasury Department's Office of Financial Stability contracted with a small consulting firm that has given nearly $25,000 to Democratic candidates since 2005 (and no money to Republicans) to hire "Freedom of Information Act (FOIA) Analysts to support the Disclosure Services, Privacy and Treasury Records." The firm is currently advertising a job opening for a FOIA analyst with experience in the "Use of FOIA/PA exemptions to withhold information from release to the public." (Emphasis Freire's)

That certainly looks like a smoking gun. This morning, after Freire's article ran, Phacil changed the job description (without notice) to read more benignly:

    Use of FOIA/PA exemptions to withhold information from release to the public that is considered classified, sensitive or falls outside of FOIA/PA guidelines (my emphasis)

While there's a practical point in the Treasury wanting to minimize the time it spends dealing with FOIA requests, it shouldn't contract with a firm that seeks a talent for withholding information as a key qualification for processing inquiries.

How a 36% Return Is Really a 5.6% Return

Finally, the Treasury also appears to have engaged in a little more creative accounting regarding their toxic asset portfolio. Bloomberg recently reported that the securities had a 36% return. (Update: Treasury says that they estimated the return between 19% and 52%) That sounds great, right? It was so good that we noted the finding yesterday. But Ash Bennington from CNBC's NetNet talked to a finance professor, Dr. Linus Wilson University of Louisiana at Lafayette, who questions this calculation:

    Dr. Wilson began by explaining the derivation of the 36% figure: "If you take a simple average of the eight fund returns, you get a 36% annualized return. That's what Bloomberg did."

    But, according to Wilson, there are other factors which must be accounted for in calculating the actual rate of return.

    "Two thirds of the taxpayer's investment is in debt: Taxpayers are receiving a meager 1% return on two thirds of their investment -- only the one third that is in equity is doing well."

From that, it sounds like he says Treasury is taking a simple average instead of a weighted average. Wilson says they're also annualizing returns in a way that makes them look twice as nice. But again, this all boils down to whose math and calculations you believe. Unfortunately, since the Treasury doesn't release the detail about the securities they hold (as Bloomberg can attest to!), it's hard to get a clearly valid third-party confirmation of its claims.

"Lies, damn lies, and statistics"

read more here - http://www.theatlantic.com/business/archive/2010/10/so-much-for-treasurys-redacted-transparency/65209/

[WhiskeyGirl]

WASHINGTON (AP) — The Treasury Department says its bank bailouts are over, but the spending continues.

In a Sept. 22 speech, Treasury Secretary Timothy Geithner said the bailouts "are completely behind us."

That's not quite correct. In the final six months in which it could spend money from the Troubled Asset Relief Program, Treasury set aside $243 million for new contracts for law firms, accountants and money managers to help run what's left of the bailouts — on top of the $529 million already spent on work by staff, private companies and other agencies. Many of the contracts last until 2019, and there's nothing to stop the government from hiring even more help if it's needed to chase down the remaining bailout money.

Most of the contracts Treasury awarded recently are for work officials can't even describe, because it's not yet needed.

That means the contracts are vague. For example, 13 law firms will share up to $99.8 million under a contract so broad it could cover virtually any kind of legal work. Future information technology needs will be billed to three companies through a $100 million contract. Four accounting companies will ensure that Treasury's rules for the bailout programs are followed — at a cost of up to $22 million.

Maybe they are providing future campaign contributions?  How can they spend millions when they don't know what it's for?  A bailout for lawyer?  A legal slush fund?  Payback?  Makes no sense.

just my humble opinions

read more here - http://www.google.com/hostednews/ap/article/ALeqM5jRRzfhDzoLeE9OpghG0XCjxq9Csw?docId=30dc9cee1eab478a8646346edf7cef27

[WhiskeyGirl]

Over the recent clamor of approval for the outcome of the Troubled Asset Relief Program (TARP), which Beltway insiders are proclaiming a success because of the high rate of repaid funds, a lone voice of comparative sanity reminded Yahoo! Finance’s Aaron Task that the Obama bailout has done far more damage than the government-massaged figures indicate. Nobel Prize-winning economist Joseph Stiglitz, who seems to understand finance and banking better than most celebrity economists, told Task that the monies paid back to TARP are “just a drop in the bucket compared to damage done to the economy.”

The money was loaned to the banks on very favorable, even preferential, terms that amounted to a government subsidy of the banking system, Stiglitz pointed out. “If the U.S. government had provided money to ordinary business at zero interest rates, what would our economy be like?,” Stiglitz asked. “What we did is give zero rates to banks, they then lent at much higher interest rates; that's the recapitalization. That's the gift.” He estimated that the damage done to the economy by hidden distortions stemming from TARP is in the trillions of dollars.

How fast could Main Street pay back a mortgage if it was at 0% interest and no fees?

The appetite for taxpayer-funded bailouts is insatiable in the financial sector. The Washington nomenklatura remains loyal to the big banks and other financials that feed their addiction to overspending, and is prepared to squeeze taxpayers dry rather than allow a Bank of America or Wells Fargo — or Fannie Mae and Freddie Mac, for that matter — to meet the same dolorous fate of hundreds of smaller, more honest, but less well-connected banks. Failure on Main Street is acceptable, it seems, but not (excepting Lehman Brothers) on Wall Street.

read more here - http://www.thenewamerican.com/index.php/economy/sectors-mainmenu-46/5015-tarp-bailout-payback-qdrop-in-the-bucketq

[WhiskeyGirl]

Neil Barofsky is a lifelong Democrat who was appointed by George Bush to be the Special Inspector General of the Troubled Asset Relief Program (SIGTARP). He has done superlative work over the last two years in uncovering vast waste of taxpayer dollars. He also has started looking into whether the car closings ordered by the Obama administration were influenced not by efficiency or economy but whether dealers were chosen to be saved based on their minority status...

What happened to Obama's post racial society?  Maybe he meant he was for all races except non-minorities?  It's not that he's against non-minorities, he's just for all the minorities...

As McTague notes, the desire by the Obama team to use faulty methodology ("Enron-style Accounting") is not just apparent in their disparaging of Barofsky but in their entire approach towards governing: in their huge deficits, delusional projections regarding the costs of Obamacare, their views that green schemes are a job panacea, and that high taxes won't harm growth. This is an administration filled with ideologues who not only have scant real-world business experience (and those that do, such as Larry Summers, are bailing out of this Ship of Fools) but have an animus towards free-enterprise and a disregard for any hints of reality that might intrude on their fantasies.

Their rage is again on display in this unjust and intemperate attack on Neil Barofsky, a man who has served the people by prosecuting financial miscreants and drug dealers.

Neil Barofsky, a lifelong Democrat.

After all, his team has dismissed and disparaged one Inspector General who had the temerity to take on one of Barack Obama's friends and political allies and also wanted to set up and have taxpayers fund a new $30 Billion Dollar lending program that was to be shielded from any Inspector General looking over its books (see "Obama, the Chicago Boys, and their 30 Billion Dollar Slush Fund").

The stimulus program is filled with waste; the latest example to come to light as a taxpayer rip-off is the $242 million weatherization program for Obama's hometown of Chicago that paid for shoddy and fraud-ridden work.

see more here - http://www.americanthinker.com/blog/2010/10/special_ig_for_tarp_neil_barof.html

[WhiskeyGirl]

In the Tuesday report, Barofsky criticizes Treasury for sins both old and new, all of which Barofsky says obfuscate the purpose and performance of the Troubled Asset Relief Program. The result of the never-ending deceit, Barofsky says, has been to provoke a severe backlash against Washington, even though the program has largely succeeded in its primary goal of helping prevent a collapse of the financial system.

Barofsky again takes Treasury to task for some already well-documented sins regarding the $700 billion program -- namely for initially telling Americans that funds from the $700 billion program would be invested only in healthy institutions and for failing to make recipients explain how they used funds from the program.

Barofsky didn't say the new valuation was wrong, only that it compared apples and oranges and may backfire if additional TARP funds must be invested into AIG. He suggested that Treasury try to restore faith in the programs by publishing side-by-side AIG valuations using the original and the new methodology and acknowledging HAMP's failings and finally publishing "meaningful" modification goals, "no matter how modest."

His recommendations, however, miss a critical point. Treasury never intended for TARP to help Main Street, but only to have a pool of cash to shore up Wall Street. The stated additional goals of helping troubled mortgage holders and reviving small business lending were only window dressing added to sell TARP to Congress and the American people. Good luck getting Geithner to come clean on that one.

read more here - http://www.thedeal.com/sense/2010/10/sense_of_the_markets:_barofsky_takes_aim_at_treasury.php