The majority of banks and financial services companies bailed out by the Troubled Asset Relief Program are probably in worse condition than publicly disclosed, according to an new study.

Audit Integrity, an independent research firm that measures corporate integrity risk, said that more than 80 percent of TARP financial services companies have a "very aggressive" or "aggressive" accounting and governance risk rating based on their most recent regulatory filings.

As a result, these companies have a high statistical likelihood that they will restate their earnings and suffer from other adverse events, including regulatory actions, shareholder litigation and bankruptcy. In contrast, two-thirds of the more than 7,000 publicly traded North American companies rated by Audit Integrity have "average" or "conservative" ratings.

The Audit Integrity analysis focused on the 25 financial services companies that have received more than 90 percent of TARP funds to date. Of the 14 financial services companies that received "very aggressive" ratings, 10 were among the recipients of the largest amounts of TARP money: American International Group, Bank of America, Citigroup, Fifth Third Bancorp, Goldman Sachs, J.P. Morgan Chase, Merrill Lynch, Morgan Stanley, PNC Financial Services Group, and Wells Fargo. Two auto companies, General Motors and Ford Motor Co., which are slated to receive TARP funding, also have low Audit Integrity ratings.

Last week, two Republican senators from Maine, Susan Collins and Olympia Snowe, wrote to Treasury Secretary Henry Paulson urging him to require banks and other financial institutions that receive TARP funds to provide a full accounting of how they have used the money. Banks have so far resisted calls for a detailed accounting.

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