Replies

Can anyone give some insight as to the motivation for wanting to overpay $62 Billion of dollars? These 16 banks, included Goldman Sachs, Deutsche Bank, Societe Generale and Royal Bank of Scotland.

Can't wait to find out. Anyone think this story will get buried?

_______________________________
N.Y. Fed Investigated by Treasury’s Barofsky Over AIG Bailout

January 26, 2010, 06:42 AM EST More From Businessweek Jan. 26 (Bloomberg) -- The Federal Reserve Bank of New York is being investigated by the chief watchdog for the U.S. financial bailout program about whether the regulator improperly limited disclosures about the bailout of American International Group Inc.

The probe by Neil Barofsky, the special inspector general charged with policing the Troubled Asset Relief Program, will also seek to determine if the New York Fed withheld documents during an audit completed in November, according to an excerpt of testimony provided to a House oversight panel.

“We have initiated an investigation into whether there was any misconduct relating to the disclosure or lack thereof,” Barofsky wrote in remarks for an Oversight and Government Reform Committee hearing scheduled for tomorrow.

The committee set the hearing to review the $182.3 billion bailout and requests by the New York Fed that the insurer limit disclosure in regulatory filings. Earlier this month, a committee member released e-mails indicating that the New York Fed asked AIG to withhold data from the public about payments made to bank trading partners.

“The New York Fed has fully cooperated with the special inspector general for TARP and will continue to do so,” Jack Gutt, a spokesman for the regulator, said in an e-mail.

Barofsky’s investigation widens an inquiry into what lawmakers have deemed a “backdoor bailout” of financial firms that were reimbursed for $62.1 billion in assets guaranteed by AIG. Treasury Secretary Timothy F. Geithner, who ran the New York Fed during AIG’s September 2008 bailout, agreed to testify at the hearing. A Treasury spokeswoman has said that Geithner wasn’t involved in decisions about AIG disclosures.

Barofsky said the oversight panel inquiry unearthed documents he didn’t receive during an investigation he completed in November. The New York Fed’s outside counsel has told Barofsky the agency will cooperate with the probe.

Banks, including Goldman Sachs Group Inc. and Societe Generale SA, were reimbursed about 100 cents on the dollar for mortgage-linked securities that had declined in value. The New York Fed made “limited efforts” over two days in November 2008 to ask banks to accept less than full value on the bonds, according to Barofsky’s November report.

E-mails obtained by Representative Darrell Issa, a California Republican and ranking member of the oversight panel, show that New York Fed attorneys had discussions with AIG about asking permission from the Securities and Exchange Commission to withhold the names of the banks and their investments.

“If anyone at the Fed thought that this investigation will stop after Wednesday’s hearing, they are completely mistaken,” Issa said yesterday in a statement. “There has been a widespread effort by officials at the New York Fed to thwart transparency and we will continue to pursue this investigation for as long as it takes.”