U.S. Treasury Secretary and Tax Cheat Tim Geithner and his minions at Treasury, trying to make the Bush-Obama TARP (and other financial-sector) bailouts look good, are cooking the books in a flagrant manner. That is the upshot of this superb bit of reporting and analysis from the incomparable Jonathan Weil of Bloomberg News. Well worth reading. A sample:
On top of that, there’s the current net cost of the government-sponsored housing financiers Fannie Mae and Freddie Mac, which the Treasury pegged at $151 billion. …[T]he report included a White House budget projection showing the net cost of the Fannie and Freddie conservatorships would fall 81 percent to $28 billion by fiscal 2022. Put another way, the projection envisions record profits at the two companies for years to come….As for the declining Fannie and Freddie cost projections, the Treasury is relying on a forecast that in essence has the two companies generating $123 billion of earnings over the next 10 years. This would be nice, except there’s no basis for believing it will happen. The companies have reported losses every year since 2007. During the previous 10-year period from 1997 to 2006, which included the housing boom, their combined earnings were only $82 billion….
This isn’t fuzzy accounting; it’s deeply dishonest accounting. Weil should not be the only journalist reporting it.