McClatchy Newspapers’ Greg Gordon reports:
Emails between the Fed and AIG made public Thursday reveal a months-long disagreement over how much the public should be told about what ultimately became a back-door bailout of AIG by taxpayers.
One series of emails describes how a lawyer for the Fed scratched out language from a regulatory filing prepared by AIG saying it had paid “100 percent of the par value” to satisfy the exotic bets, called credit-default swaps.
The payments, including $13.9 billion to Wall Street behemoth Goldman Sachs, have been a flashpoint for controversy. A special inspector general tracking the use of bailout money recently criticized the New York Fed for overriding AIG’s attempts to settle the swaps for lesser sums.
What strikes me here is not only that the taxpayer was kept in the dark, but also that AIG was forced to pay it’s credit default swaps to banks in full without negotiating. In other words, it was a stealth bank bailout.