TARP Inspector General Looking Into AIG Payments to Goldman Sachs, Others
Neil Barofsky, the inspector general of the TARP funds for Treasury, sent a letter to Rep. Elijah Cummings (D-Md.) and 26 other members of Congress last week saying he has opened an investigation into whether AIG paid more government bailout money than necessary to big banks that held claims against the troubled insurance giant.
The ongoing bailout of AIG with federal money -- so far, more than $183 billion in direct loans and promises -- has been a hot-button issue for Cummings. He asked Barofsky to look into it and whether AIG paid the full amount owed to big banks, such as Goldman Sachs, instead of asking them to accept less to settle the debt.
“To what extent did AIG pay counterparty claims at 100 percent of face value and was any attempt made to renegotiate and close out these claims with ‘haircuts?’ ” Barofsky wrote. “Questions concerning whether AIG paid more than necessary to counterparties and whether Treasury adequately monitored such payments are clearly relevant.”
Barofsky will determine if big banks “such as Goldman Sachs” could have afforded to take losses on the credit-default swaps that Goldman and others bought from AIG.
“I was very pleased to receive a response from Mr. Barofsky informing me that his office has opened an audit to further investigate this situation," Cummings said in a release. "AIG has been the largest recipient of taxpayer assistance during the current economic crisis, and the American people now essentially own this company, holding nearly 80 percent of its equity. As such, it is critical that we ensure that AIG is spending this money with taxpayers’ best interests at heart."
April 7, 2009; 4:07 PM ET
Categories: The Ticker | Tags: AIG, Elijah Cummings, Neil Barofsky, bailout, credit default swaps
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Posted by: kidvid | April 7, 2009 4:48 PM | Report abuse
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