26 January 2010

Investigation Into Misspent TARP Secret Funds Approved By Geithner

Fox News: Bailout Watchdog Investigating Fed's AIG Secrecy

Special inspector general for the TARP says the Fed withheld documents he requested when auditing AIG's "backdoor bailouts" of banks it did business with.

An independent investigator is launching two probes into the government's rescue of American International Group Inc. and the insurer's subsequent payments of billions to big banks.

Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, says the Fed withheld documents he requested when auditing AIG's "backdoor bailouts" of banks it did business with, including Goldman Sachs Group Inc. Barofsky's allegations came in prepared testimony provided to members of the House Committee on Oversight and Government Reform and obtained by The Associated Press.

The committee is investigating why the New York Fed, then led by Treasury Secretary Timothy Geithner, agreed to pay banks billions to cancel their contracts with AIG, which is based in New York.

Geithner approved the deals, which may have cost taxpayers billions more than necessary because he did not demand concessions from banks AIG did business with, according to Barofsky's earlier audit.

Barofsky's second investigation is into e-mails from New York Fed lawyers instructing AIG to withhold some details of the deal from a disclosure filed with the Securities and Exchange Commission.

Lawmakers have chastised the Fed for refusing to say which banks benefited from the AIG bailout, and by how much. A series of e-mails released under the subpoena show New York Fed officials and lawyers arguing for AIG to reveal less information than it wanted about those deals and other matters.

No comments: