Treasury Responds To SIGTARP Allegations It Is Nothing But A Shady Den Of Incompetent, Manipulative Thieves
Two days ago, we highlighted the SIGTARP's report in a post titled: "SIGTARP Calls Out Tim Geithner On Various Violations Including Data Manipulation, Lack Of Transparency, "Cruel" Cynicism, And Gross Incompetence." Instead of keeping its mouth shut and hoping that Geithner quits quietly, so the whole scandal can be buried quietly, the Treasury comes out with the most amateur response that is sure to provoke a firestorm of media attacks to what is nothing more than an attempt to manipulate taxpayer perceptions about the government's now legendary capacity for fraud, manipulation and failure. In a nutshell, according to the Treasury the fact that the Treasury itself is able to manipulate AIG's common stock price higher thanks to Brian Sack, is indicative of the success of Geithner's handling of AIG. In the vein of Bill Gross, move over Catch 22, and meet Sammy 22.
First, Geithner henchwoman Jen Psaki confirms her office is not only corrupt and manipulative, it is mostly incompetent.
Some people just don’t like movies with happy endings. How else to explain this week’s report by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP)? Rather than focusing on the growing evidence we’ve seen in recent months that TARP will be far less costly than anyone expected, SIGTARP instead sought to generate a false controversy over AIG to try and grab a few, cheap headlines.
Last month, the Administration released a new report showing that – after giving effect to a proposed restructuring and based on current market prices – Treasury’s overall investment in AIG is expected to break even or turn a profit. This valuation reflects AIG’s recently announced exit strategy to pay back taxpayers, including the conversion of Treasury’s illiquid preferred stock stake in that company to 1.7 billion shares of publicly traded common stock.
Unlike the preferred stock we currently hold, AIG’s common stock has a readily identifiable value on the New York Stock Exchange. Under federal accounting rules, we are required to value that common stock at the current market price. And based on current market prices, the sale of that AIG common stock would provide a substantial profit for taxpayers.
The math isn’t that complicated. It’s simple multiplication. Our calculations on AIG are straightforward, and we have published our methodology for all of the American people to see.
SIGTARP, however, incorrectly claims that our report is inconsistent with TARP’s audited financial results from March 2010. And in doing so, SIGTARP seems to be arguing that when Treasury conducts any evaluation of the cost of its investment in AIG, it should pretend that the company’s exit strategy was never announced.
SIGTARP’s analysis seems to be stuck in a time warp if they believe that we should ignore AIG’s exit strategy in evaluating our investment in that company. Moreover, they demonstrate a fundamental misunderstanding of the difference between audited financial results – which are backward looking and represent a snapshot in time – and forward-looking valuations of future profits, such as Treasury’s recent report.
And what is scariest, is that the Treasury itself admits its own calculations for "profit" in all the other companies that have Treasury involvement is now null and void, and subject to great scrutiny.
Additionally, invaluing our expected common stock holdings in AIG,
Treasury employed the exact same methodology we use for valuing the
common stock we own in other publicly traded companies. And we made it
clear that the valuation was based on giving effect to the restructuring
and subject to certain conditions, which AIG is moving to fulfill. The
fact that AIG will raise at least $18 billion in its offering of AIA –
announced in the last few days – brings us one big step closer to
completing the restructuring and ensuring that taxpayers are paid back.
And the piece de resistance:
All of this financial talk can get complicated, but here’s the bottom
line: Any truly independent observer would say that Treasury’s stake in
AIG will be worth more than taxpayers originally invested in that
company. Of course, as with any investment, prices could rise or fall in
the future. That’s the nature of any financial transaction. But
Treasury is confident that we are in a much stronger position today to
recoup our investment in AIG than two years ago – or even a few short
months ago. And that’s very good news for taxpayers.
And there you have it - don't worry America, be happy - you see, you are all a bunch of dumb idiots, and this is
complicated stuff, so leave it to Timmy. He is honest, and he knows what
he is doing. As for those who do understand the great lie being committed here, well they are all on our side, and would never willingly risk their billion dollar bonuses and expose the gargantuan ponzi scheme created by the Treasury. Now if only someone could explain how game theory works to that pesky Bill Gross....