Congressman Bachus; Why Was AIG Prevented From Disclosing Bailout Information?

WASHINGTON - Congressman Spencer Bachus, Ranking Member on the on the House Financial Services Committee, wrote to Chairman Barney Frank yesterday urging him to convene a hearing to examine the latest report that the Federal Reserve Bank of New York, under the leadership of Secretary Geithner, prevented AIG from disclosing information and documents related to its government bailout.

Bachus said, "Unfortunately, disclosure and transparency have been sorely lacking when it comes to congressional and public review of the circumstances surrounding AIG's bailout. For months, the public was prevented from knowing the names of AIG's counterparties and the extent to which AIG fulfilled its obligations to those firms. We learned today that it was the New York Fed that stepped in to prevent public disclosure of this information by deleting the counterparty names and payment information from AIG's draft regulatory filing.  This calculated attempt to withhold important information from the public and market participants runs counter to the principles of our capital markets."

Ranking Member Bachus first questioned Secretary Geithner for information on whether foreign and domestic counterparties were paid 100 cents on the dollar during Committee hearings held on March 24th and March 26th 2009.  Bachus also questioned Geithner regarding reports that U.S. banks are being asked to take haircuts. On November 23, 2009, Bachus sent this letter [1] to Treasury Secretary Geithner asking for additional information regarding the extent to which AIG has met its obligations to U.S. banks that are creditors. 

Bachus said, "As you know, since March 2009 I have raised concerns, and called for hearings, regarding  the disparate treatment of U.S. banks and foreign institutions by insurance giant American International Group (AIG). ... In November 2009, I wrote to Secretary Geithner requesting an explanation of the extent to which AIG met its obligations to creditors that are U.S. banks.  Unfortunately, to this day, Secretary Geithner has provided no explanation."

"There is no more urgent business before the Committee and this hearing should be given the highest priority," Bachus stated.

NOTE: Click here [2] to view a copy of the letter.

Bachus has called for the Financial Services Committee to convene hearings on AIG's counterparty payments since March 2009.  Bachus wrote to Chairman Frank to request hearings on March 25, 2009 [3], July 16, 2009 [4], and November 19, 2009 [5].