From news.yahoo.com 9/24/09
by David Lawder
WASHINGTON (Reuters) – U.S. taxpayers will probably never recover all of the hundreds of billions of dollars invested to bail out financial firms, automakers and homeowners, a key watchdog for the program said on Thursday.
Neil Barofsky, the special inspector general for the U.S. Treasury's $700 billion Troubled Asset Relief Program (TARP), said in prepared U.S. Senate testimony that the bailout fund played a significant role in stabilizing the financial system, but it may never fulfill certain policy goals.
"The progress on meeting the goal of 'maximizing overall returns to the taxpayer' is unclear," Barofsky said in testimony to be delivered to the Senate Banking Committee.
"While several TARP recipients have repaid funds for what has widely been reported as a 17 percent profit, it is extremely unlikely that the taxpayer will see a full return on its TARP investment."
Surprise, Surprise. From my worldview as a CPA, if we (taxpayers) are not going to see a full return on our “investment”, then we have a loss not a profit. Any claims that the TARP funds are returning profits are false. We also have a concept in accounting which calls for the accrual of known items. For instance, if we truly anticipate that customers will not pay us back the amount owed, we should establish a reserve for a bad debt. For the TARP funds, any claim of profitability should be offset by anticipated losses to give a true picture. Based on Barofsky’s claim, we should be recognizing the anticipated losses. We should also call “BS” when someone claims profitability on TARP funds without including the entire picture. To present misleading information is a disservice to our country. Oh wait, I forgot, the politicians aren’t there to represent us. They have their own agenda…..
© 2009 – Jim Lindell