Tim Geithner's NY Fed Told AIG to Keep Quiet About $105bn Paid to Banks

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Tim Geithner’s
Federal Reserve Bank of New York urged American International Group
(AIG) to remain silent on $105bn (£65bn) of payments made
to banks including Goldman Sachs and Deutsche Bank at the height
of the financial crisis.

The New York
Fed, under Mr Geithner’s leadership until he was appointed US Treasury
Secretary in January 2009, instructed the troubled insurer to withhold
details of the payments from the American public, which bailed out
AIG by as much as $182bn at its financial nadir.

According to
a series of emails obtained and made public by Congressman Darrell
Issa, AIG had planned to inform investors in a regulatory filing
published on December 24, 2008, that it had paid counter-party banks
owed money at a rate of 100 cents on the dollar. The banks were
owed the money for credit-default swaps they had entered into, mainly
on behalf of clients.

However, according
to the emails, an official from the NY Fed crossed out the reference
ahead of publication, and there was no mention of the payments,
which came to light five months later, in the filing.

the rest of the article

8, 2010

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