Some myths just won't die. And if they're repeated often enough they can become the stuff of legends.
Banking analyst Dick Bove, a regular CNBC television guest, is doing his part to keep the TARP was 'profitable' myth going. On a recent episode of Charlie Rose, NY Times columnist David Brooks made clear that accounting is not his forte as he too has been hoodwinked into thinking TARP is 'profitable'.
Cultural insights -- not financial acumen -- are Brooks' strength, so perhaps he can be somewhat forgiven. Bove, on the other hand, knows better.
As discussed previously here, here, and here, the only way to claim that TARP is profitable is if you're willing to take it in isolation of the entire government bailout, including the GSEs and Fed asset purchases which may end up costing taxpayers trillions.
Claiming that TARP is profitable is intellectually dishonest and is emblematic of the accounting shenanigans which continue to distort our financial picture of not just the banking sector, but of the U.S. federal government.
Is there a political motivation behind all the repeated claims that TARP was profitable? Certainly it stands to make the the banking sector look better in the eyes of taxpayers, and it casts a more favorable light on the massive government intervention launched by 'Government Sachs' and Treasury Secretary Hank Paulson, and continued by the Obama administration.
Unfortunately, the TARP profitability myth appears to have established firm traction. As such expect future government intervention and bailouts to be justified on the myopic accounting basis that TARP worked so well.