Fed Advice to A.I.G Scrutinized

Mary Williams Walsh
The New York Times
January 7, 2010

New revelations that the government stopped the American International Group from revealing information about its bailout had securities lawyers and policy makers buzzing on Thursday about whether the information had to be disclosed under federal securities law, and if so, what to do about the lack of compliance…

…The latest concerns that the government was suppressing important information about A.I.G. arose on Thursday after Representative Darrell Issa, a Republican of California, obtained e-mail messages between the insurer and the Federal Reserve Bank of New York, in which a Fed lawyer told A.I.G. “there should be no discussion” of certain details of the bailout in a regulatory filing.

The e-mail messages dealt with one of the most controversial aspects of A.I.G.’s bailout: that the Fed was paying the insurer’s trading partners 100 cents on the dollar for their soured investments. A.I.G. cited this fact, but the lawyer crossed the reference out.

The Fed also struck a paragraph about other investments that could not be unwound…

…Mr. Geithner was president of the New York Fed at the time of the e-mail exchange. The contents of the messages were first reported by Bloomberg News…

The entire article is at the NYT.

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