Capital Market Subcommittee Chairman Emphasizes Need for Deal to Protect Taxpayers

WASHINGTON - Congressman Paul E. Kanjorski (D-PA), the Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, today wrote to U.S. Treasury Secretary Timothy F. Geithner to request details about the efforts to end the federal government's support of American International Group (AIG) before the finalization of any settlement, and emphasized that any negotiated exit strategy needs to protect the interest of taxpayers.  In recent days, press reports have indicated that negotiations about a wind-down of the government's interests in AIG have intensified and that the interested parties may soon announce a plan to return AIG to private ownership. 

The text of Chairman Kanjorski's letter to Secretary Geithner follows:

Dear Mr. Secretary:

As Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, I write to request that the Treasury Department inform Congress as quickly as possible about the pending, though widely reported, negotiations to end the U.S. government's involvement in American International Group (AIG).  Under the Constitution, Congress has a responsibility to conduct oversight of these matters.

The Emergency Economic Stabilization Act of 2008 vested the Treasury Department with considerable powers to limit the consequences of the financial crisis, including responding to the AIG situation, but Congress also imposed numerous forms of oversight to monitor the Treasury Department's actions on behalf of the American public.  To date, the Treasury Department has generally complied well with significant mandates and congressional requests for information.  The Treasury Department has also worked to regularly inform Congress about important developments in the financial services sector and the broader economy.

In recent days, however, the financial press has reported extensively about potential plans to wind down the U.S. government's stake in AIG in order to return the company to private ownership.  Returning AIG to private control is a desirable goal and ought to be done as soon as possible, but any deal must also work to protect the interest of U.S. taxpayers, who now own nearly 80 percent of AIG.  Some media reports have suggested that resolving the U.S. government's current AIG investments may ultimately cost the taxpayers as much as $45 billion, while other sources have suggested that the proposed exit strategy may actually break even or return money to U.S. taxpayers.  By providing Congress with more detailed information about the pending proposals and negotiations, the Treasury Department can help to resolve confusion about these important matters.

As Chairman of the subcommittee with jurisdiction over the U.S. Securities and Exchange Commission, I recognize the need to protect the confidentiality of pending negotiations as prescribed by Federal securities laws.  I also appreciate the sensitivities and difficulties of multi-party negotiations.  This situation, however, is unique.  The U.S. government has invested billions of dollars in AIG, and as representatives of the U.S. taxpayers, Congress needs as much information as possible about any potential resolution plan as soon as possible.

In closing, I urge the Treasury Department to wind down the U.S. government's interest in AIG as quickly as possible and in a way that will protect taxpayers.  I also look forward to learning more about the status of these negotiations before final plans for an exit strategy are complete.

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