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Geithner Told AIG To Hide Information

From Bloomberg News:

Geithner’s New York Fed Told AIG to Limit Swaps Disclosure

Hugh Son Thu Jan 7

Jan. 7 (Bloomberg) — The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” …

Issa requested the e-mails from AIG Chief Executive Officer Robert Benmosche in October after Bloomberg News reported that the New York Fed ordered the crippled insurer not to negotiate for discounts in settling the swaps. The decision to pay the banks in full may have cost AIG, and thus taxpayers, at least $13 billion, based on the discount the insurer was seeking.

The e-mail exchanges between AIG and the New York Fed over the insurer’s disclosure of the transactions show that the regulator pressed the company to keep details out of the public eye

The e-mails span five months starting in November 2008 and include requests from the New York Fed to withhold documents and delay disclosures. The correspondence includes e-mails between AIG’s Shannon and attorneys at the New York Fed and its law firm, Davis Polk & Wardwell LLP. Tom Orewyler, a spokesman for Davis Polk in New York, declined to comment as did Shannon.

According to Shannon’s e-mails obtained by Issa, the New York Fed suggested that AIG refrain in a filing from mentioning so-called synthetic collateralized debt obligations, which bundled derivative contracts rather than actual loans.

The filing “reflects your client’s desire that there be no mention of the synthetics in connection with this transaction,” Shannon wrote to Davis Polk on Dec. 2, 2008. “They will not be mentioned at all.”

AIG had about $9.8 billion of swaps protecting the synthetic holdings as of September 2008, the company said on Dec. 10, 2008. Goldman Sachs said in a press release last month that it was among banks that had losses on synthetic CDOs…

Ah so.

Yet more transparency from the most transparent administration in history.

This article was posted by Steve on Thursday, January 7th, 2010. Comments are currently closed.

5 Responses to “Geithner Told AIG To Hide Information”

  1. Tater Salad says:

    We now have a person in the White House that has “some balls” finally and here is why:


  2. proreason says:

    For the system to work at peak efficiency, the criminals in big business must cooperate closely with the criminals in government.

    And we see the results.

    Wall Street got richer. Government got bigger and more powerful. Only middle class Americans suffered. Big Time.

    As planned.

  3. ptat says:

    Maybe THIS will finally stick and get this loser out of our house!

  4. Rusty Shackleford says:

    Well, the way I see it, all legalities aside, this just adds to the number of cats Obama is trying to put and keep in a box. Invariably they keep getting out and he has to chase them down and get them under control.

    His plan of “distract while gouging another segment of the economy” is backfiring and simply because not everyone is cooperating to the fullest and that he and his fellow crooks cannot anticipate every contingency. Like Rush said, he will overreach and has done so, repeatedly and that means he will lose control of all his plots and sub-plots.

    As usual, the devil is in the details and those details will serve right-thinking people very well. Unfortunately, it will also result in a lot of damage before Captain Obvious shows up to point out how bad it is, prompting action by the American idle majority.

  5. jobeth says:

    “Yet more transparency from the most transparent administration in history.”

    In a strange way they really are the most transparent administration in history. Most of us…on the conservative side at least…can see right through this bunch of liers and tax cheats, commies, socialists…and much much more.

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