Dems Question AIG Transactions
By ARTHUR D. POSTAL
National Underwriter News
March 30, 2009
Washington - Twenty-seven House Democrats are calling for an investigation of federal approvals of efforts to unwind transactions with American International Group Inc. counterparties.
The group, led by Rep. Elijah Cummings, D-Md., has submitted the request in a letter to Neil Barofsky, the special inspector general who oversees the Troubled Asset Relief Program.
AIG, New York, recently released lists of the indirect beneficiaries of the federal government's AIG rescue efforts.
AIG's lists "raised more questions than they answered," lawmakers write in the letter to Barofsky.
"We would like to know if the AIG counterparty payments, as made, were in the best interests of the taxpayers who provided the funding and in the best interests of re-establishing long-term economic stability," the lawmakers write.
The lawmakers say they want Barofsky to find out "what kind of assessments (if any) were made of the health and total exposure risks of the counterparties, as well as whether or not AIG made any attempts to renegotiate the contracts," the lawmakers write.
The lawmakers note that one AIG counterparty listed, Goldman Sachs Group Inc., New York, has claimed that it had no material exposure to AIG.
"Congress and the American people were told that the AIG bailout was necessary to limit systemic risk across the global economy," but AIG used the federal support to pay all claims to counterparties, including swap-related claims, at 100% of face value, the lawmakers write.
If risk assessments of specific counterparties were made, "were made, by whom were they made and what were the criteria guiding the assessments?," the lawmakers ask. "What was the benefit of the decision to pay 100% of face value to the American taxpayers who provided the bailout funds and how did it support the goal of ensuring the stability of the economic system?"
Click here to return to FBIC homepage