Rick Santelli and Rep. Scott Garrett on Federal Loans

Early Thursday, CNBC’s Rick Santelli and Representative Scott Garrett (Republican-New Jersey), discussed fair-value accounting in Government loan programs. Let’s take a look at some of the highlights:

Mr. Santelli starts the interview by citing a Wall Street Journal story: “Fraudulent Government Accounting.”

“The Congressional Budget Office, Washington’s official financial scorekeeper, says in a new report that the Department of Education’s four largest student loan programs will yield an official savings of about $135 billion in fiscal years 2015-2024. That’s $135 billion that Congress will claim it has available to spend. But CBO also notes that under fair-value accounting that is practiced in the real world, the four student loan programs will likely cost $88 billion. An official $14 billion projected taxpayer gain at the Export-Import Bank is actually a $2 billion loss. And the official $63 billion windfall expected from the FHA’s single-family mortgage guarantee program is in reality a $30 billion taxpayer fleecing. CBO is obligated to practice bogus accounting under the amusingly titled Federal Credit Reform Act of 1990. But CBO periodically does a public service by calling attention to this legal fraud and explaining why its official estimates don’t accurately measure what these programs really cost.” (WSJ).

Regarding fair-value accounting, Rep. Scott Garrett answers: “the CBO does it -as you and I might say- the right way, to include the fair-value accounting.” On the opposite, he assures, the Office of Management and Budget, does not, and that’s why they are trying to get them to do what they believe is the right analysis on these things.

When looking at the student loan programs and at the FHA (Federal Homing Administration), what many notice is that the Government is getting involved in the financial aspects. Mr. Garrett clearly sees this as a problem. “When the government ever gets involved with anything, they imply to the American public there’s something like a free lunch out there and we know in life there is no such thing as a free lunch –he declares. Ultimately, the taxpayer is put on the hook.” For instance, Mr. Garrett assures that the FHA’s programs do not make money for the taxpayer and the Government, as they would assure. On the opposite, the CBO tells us that FHA loses around $3.5 billion.

But, what about kids that go to college? What about their families? College is certainly expensive. However, one must get “accurate facts” to make a “true judgment”, Santelli states.

Disclosure: none

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Top Reasons For Getting Fired

The 3 Best States to Start an LLC

10 Jobs That Allow You to Travel

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!