Press Release

FOR IMMEDIATE RELEASE
January 20, 2010

Congressman requests immediate investigation of governmental role in counterparty payments.

(Washington, DC) – Congressman Elijah E. Cummings, (MD-07) along with House Oversight and Government Reform (OGR) Chairman Edolphus Towns (NY-10) today sent a letter to the Government Accountability Office (GAO) to conduct a full audit on interactions between American International Group (AIG) and the New York Federal Reserve Bank (FRBNY), specifically focusing on the handling of counterparty payment negotiations.

The letter was sent following a statement made Tuesday by the Chairman of the Federal Reserve, Ben Bernanke, welcoming such an audit. As well, Mr. Bernanke promised a free and full release of documents concerning AIG to the OGR Committee, on which Congressman Cummings serves.

“Such a review is a necessary component and complement to investigations conducted by the House Oversight and Government Reform Committee and the Special Inspector General for TARP (SIGTARP),” Cummings said in the letter. “The Federal Reserve has asked for this level of review and it is incumbent on Congress to follow through and ensure that sufficient oversight is cast on this issue.”

The letter, sent to Acting Comptroller General Gene L. Dodaro, specifically requests a full review of any federal assistance given to AIG from September 2008 until the present. Cummings and Towns asked that the review examine, at a minimum:

• The decision-making process at AIG and FRBNY regarding payments made to AIG’s counterparties to credit default swap contracts on collateralized debt obligations, specifically whether the decision to pay at par “left money on the table”;
• Who made the decision to pay the counterparties at par and on what authority;
• The decision not to disclose the identities of the counterparties and other financial details in regulatory filings and Congressional testimony until March 15, 2009;
• The decision not to let AIG file for bankruptcy protection and;
• The implications of the AIG rescue for future federal assistance to private firms.

“The GAO has already published helpful and insightful studies of AIG and the federal assistance extended to the firm,” said Cummings. “I hope that they can incorporate this foundational knowledge to create a comprehensive review of the government’s intervention into and interaction with AIG. Through this request, I ask not only what happened, but also, why?”

The House Committee on Oversight and Government Reform will hold a hearing on Wednesday, January 27,regarding the interaction between FRBNY and AIG.

-30-

###