A new investigation by the Government Accountability Office (GAO) has determined that the U.S. Department of the Treasury has intentionally avoided issuing press statements relating to the Troubled Asset Relief Program (TARP) if the news projected long-term costs to the federal government.
‘Although Treasury regularly reports on the cost of TARP programs and has enhanced such reporting over time, GAO's analysis of Treasury press releases about specific programs indicate that information about estimated lifetime costs and income are included only when programs are expected to result in lifetime income,’ says the GAO in its newly released report. ‘For example, Treasury issued a press release for its bank investment programs, including the Capital Purchase Program, and noted that the programs would result in lifetime income, or profit.
‘However,’ the GAO adds, ‘press releases for investments in American International Group – a program that is anticipated to result in a lifetime cost to Treasury – did not include program-specific cost information. Although press releases for programs expected to result in a cost to Treasury provide useful transaction information, they exclude lifetime, program-specific cost estimates. Consistently providing greater transparency about cost information for specific TARP programs could help reduce potential misunderstanding of TARP's results. While Treasury can measure and report direct costs, indirect costs associated with the moral hazard created by the government's intervention in the private sector are more difficult to measure and assess.’
The GAO report also warns that ‘Treasury's exit from TARP remains uncertain,’ although it notes that the project costs of TARP ‘will be much lower than the amount authorized when the program was initially announced.’ Treasury's fiscal year 2011 financial statement, audited by the GAO, estimated that the lifetime cost of TARP would be about $70 billion.
The Treasury Department did not publicly comment on the GAO findings.