Scrutiny of AIG Aid Stirs Anger at Federal Reserve

[WhiskeyGirl]

I wonder who is expressing anger?  Is there gnashing of teeth?  Pounding of fists?  Colorful language?

"Scrutiny of AIG Aid Stirs Anger at Federal Reserve"

WASHINGTON—Continuing congressional scrutiny of the American International Group Inc. saga is provoking further backlash against the Federal Reserve as lawmakers ponder diluting the Fed's oversight of banks and weigh Ben Bernanke's confirmation for a second term as Fed chairman.

No issue in the Federal Reserve's financial rescue has drawn as much blowback from lawmakers and the public as the September 2008 move to keep AIG out of bankruptcy with what eventually amounted to more than $180 billion in government aid.

More here - http://online.wsj.com/article/SB10001424052748704381604575005563326084220.html?mod=googlenews_wsj

“When average people were losing their homes and their jobs, the Bush administration decided to use taxpayer dollars to give a backdoor bailout to the biggest players on Wall Street,” Rep. Towns said.

“Now we know that the people who delivered the bailout wanted to keep the details hidden from the public,” Mr. Towns added.

“We need to understand why and how taxpayer dollars were used to bail out the same people who helped cause the financial crisis in the first place,” he said.

Besides Mr. Geithner, others who have agreed to testify include Thomas Baxter, executive vice president and general counsel of the Federal Reserve Bank of New York; Neil Barofsky, special inspector general for the Troubled Asset Relief Program (SIGTARP); and Elias Habayeb, the former senior vice president and chief financial officer of the AIG Financial Services Division.

Also invited to testify were Henry Paulson, the former treasury secretary, and Stephen Friedman, the former chairman of the Federal Reserve Bank of New York (FRBNY) and current member of the Goldman Sachs board.

http://www.property-casualty.com/News/2010/1/Pages/Geithner-To-Testify-At-House-Inquiry-On-AIG-Fed-Dealings.aspx


U.S. Aid Benefits Banks, not Homeowners

Government support for the economy has helped banks make all manner of windfall profits. But have outsize returns in banks' mortgage operations deprived borrowers of lower mortgage rates?

In 2009, there was a big jump in an industry margin used to gauge the profitability of banks' main mortgage business, selling home loans to government-supported Fannie Mae and Freddie Mac.

In theory, if that margin had remained at narrower, historical levels, mortgage rates for borrowers could have been lower. That might have created sizable savings for homeowners over the life of their loans and breathed more life into the housing market.

Why aren’t savers sharing the wealth?
More here - http://online.wsj.com/article/SB10001424052748704363504575003292596304822.html?mod=googlenews_wsj

[WhiskeyGirl]

Jan. 21 (Bloomberg) -- American International Group Inc. submitted four rounds of regulatory filings in six months, with more than 1,000 redactions, as the Federal Reserve Bank of New York pressed the insurer to withhold data about bailout payments to banks.

The insurer made an initial filing on Dec. 2, 2008, about Maiden Lane III, the taxpayer-funded vehicle that bought assets from AIG’s trading partners. After the Securities and Exchange Commission asked for more information, AIG amended December filings three times. The last set of amendments, in May 2009, included more than 400 redactions, and the SEC granted the company permission to withhold the omitted data until 2018.

...

...“There’s this pattern that emerges that the New York Fed, for a variety of reasons including not causing nervousness about who was an AIG counterparty, covered up its rather heavy-handed approach to the bailout.”

...The New York Fed said Jan. 19 that it “assisted AIG in ensuring the accuracy of its disclosures and protected important U.S. taxpayer interests” and that the insurer was responsible for its disclosures.

http://www.businessweek.com/news/2010-01-21/aig-took-four-tries-on-filing-as-fed-asked-to-withhold-data.html

Let me think...Who's in Congress will get this duty?  Who will make the assignments?  Dodd?  Barney?

Does the Fed audit every businesses SEC filings?

Why didn't those counterparties take a BIG haircut?