$25 Billion in AIG Bailout Money Went to Wallstreet Banks

by Project Censored

AIG’s bailout permitted the company’s use of $25 billion in government money to buy back toxic securities from Wall Street’s big banks. AIG was the world’s top player in the trade of credit default swaps – exotic instruments blamed for fueling the cascade of financial disasters in 2007 and 2008. The company ultimately received four separate federal bailouts and, unlike big banks, is unlikely to pay it all back to taxpayers.

When the investments collapsed, AIG owed billions to Goldman, Bank of America and Citigroup, among others. Instead of honoring the insurance agreements, AIG used $24 billion in taxpayer funds to buy the mortgage investments from the banks at 100 cents on the dollar.

Former New York Governor Eliot Spitzer suspects pre-bailout deals were made to protect the big banks.  Spitzer said, “given that taxpayers own nearly 80 percent of the company the public is entitled to see a decade’s worth of AIG’s e-mail, internal accounting documents and financial models. This information will help prosecutors determine whether AIG employees broke the law.”

Instead the current trustees of AIG Credit Facility Trust are stonewalling any discovery. The Trustees—all appointed by the New York Fed, could compel AIG to release documents that may expose corruption regarding pre-agreements made before the bailouts occurred. Although the New York Fed says the trustees are independent, each is either a current or former Federal Reserve official, currently drawing $100,000 a year to serve on the AIG Credit Trust.

One trustee, Jill M. Considine, chairs a firm that administers hedge fund portfolios and is a former board member of the New York Fed. Another trustee, Chester B. Feldberg, was an employee of the New York Fed for 36 years. Douglas L. Foshee, chief executive of the El Paso Corporationand former chief operating officer of Halliburton, is the current board chair of the Federal Reserve Bank of Dallas’ Houston branch.

Title: What’s Still Hidden In AIG’s Files?

Source: Huffington Post: 1/15/10

http://www.huffingtonpost.com/2010/01/15/whats-still-hidden-in-aig_n_425320.html

Author: Ben Protess Faculty Evaluator: Peter PhillipsSonoma State University