Did the NY Fed lose taxpayers billions of dollars on AIG bailout?

Filed under: Company News, Goldman Sachs , American International Group, INC., Bank of America

There are two sides to every story, and sometimes three, four or five. An audit by the Special Inspector General for the Troubled Asset Relief Program claims that the Federal Reserve Bank of New York allowed banks to get 100% of the value of complicated financial instruments that they had insured with AIG (AIG). The transactions involved over $60 billion. The full report was issued today.

The inspector general Neil M. Barofsky claims that the Fed “refused to use its considerable leverage” to force major banks to make concessions on the money they were owed as part of their relationships with AIG. Goldman Sachs (GS) was among the firms that benefited from the Fed’s action while Credit Suisse (CS) actually offered to take less than 100 cents on a dollar for its insurance claims and was turned down. Barofsky’s conclusion is that, “Tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.’s counterparties.”

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Did the NY Fed lose taxpayers billions of dollars on AIG bailout? originally appeared on DailyFinance on Tue, 17 Nov 2009 05:05:00 EST. Please see our terms for use of feeds.

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