Fed Pressed AIG to Limit Public Disclosures of Payments

The New York Fed, under the leadership of current Treasury Secretary Tim Geithner, pressed bailout recipient AIG in late 2008 to limit its public disclosures about the company’s payments to counterparties, according to emails obtained by ABC News. In one email, the New York Fed crossed out a reference that AIG was planning to make in a regulatory filing to paying counterparties such as Goldman Sachs and Societe Generale the full value of their credit-default swaps. That information was then excluded from AIG’s eventual filing in December 2008. In all, 16 of AIG’s counterparties – financial institutions in the US and abroad who had deals with the insurance giant -- received $62.1 billion in taxpayer money after they were paid full value for their swaps, with Societe Generale raking in $16.5 billion in payments and Goldman Sachs $14 billion. “It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information to the SEC,” Rep. Darrell Issa, the ranking Republican on the House Oversight & Government Reform Committee who first obtained the AIG emails, said in a statement today. “The American taxpayers, who own approximately 80% of AIG, deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” The actions of Geithner’s New York Fed during the AIG bailout have already come under fire on numerous occasions, most recently in a November 17 report from bailout watchdog Neil Barofsky, who wrote, “There is no question that the effect of FRBNY’s decisions -- indeed the very design of the federal assistance to AIG – was that tens of billions of dollars of government money was funneled inexorably and directly to AIG’s counterparties.”...read more