January 27, 2010

WASHINGTON -Financial Services Committee Ranking Member Spencer Bachus issued the following statement regarding today's House Oversight and Government Reform Committee hearing on AIG's bailout:

"For nearly a year I have been asking questions regarding the disparate treatment of U.S. banks and foreign institutions by insurance giant American International Group (AIG).

"While the New York Fed approved making credit default swap counterparties whole, U.S. banks who are creditors of AIG are being asked to take severe haircuts.  Secretary Geithner has yet to provide any information about this disparity.  Americans deserve to know why foreign and domestic counterparties were made whole and why U.S. banks should take a haircut. 

"New and disturbing details concerning AIG's counterparty payments and the cover up by the Federal Reserve Bank of New York continue to come to light.

"Yesterday we learned that Goldman Sachs had offered to cancel its credit default swaps with AIG, and in spite of this, the New York Fed moved ahead and paid AIG's counterparties one hundred cents on the dollar.  This back door bailout cost taxpayers at least $27.1 billion and possibly up to $60 billion.

"As recently as two weeks ago, Secretary Geithner said that paying AIG's domestic and foreign counterparties one hundred cents on the dollar was ‘the right thing to do.'  He forgets that the right thing to do is to protect taxpayers and act in their best interest. He also forgets that AIG's obligations to regional and community banks have still not been fulfilled.

"It is evident that the New York Fed, under the leadership of Tim Geithner, was only interested in ensuring that details of AIG's counterparty payments were kept secret.  Everything surrounding AIG has been a cover up.  Whether it was the massive bonuses given to employees, executive pay, or the counterparty payments, information was intentionally kept from the public. Secrecy has been, and continues to be, the main objective of Secretary Geithner and the New York Fed.  It is time for Secretary Geithner to provide a full and honest accounting concerning AIG to the American people.

"I will continue to press for details and work to ensure a hearing is held before the Financial Services Committee. There are still many unanswered and important questions that deserve to be addressed in a public hearing."

NOTE: Ranking Member Bachus first questioned Secretary Geithner for information regarding the disparity of treatment by AIG during Committee hearings held on March 24th and March 26th 2009.

Bachus has called for the Financial Services Committee to convene hearings on AIG's counterparty payments since March 2009.