WASHINGTON. D.C. – House Committee on Oversight and Government Reform Ranking Member Darrell Issa (R-CA) today called for the annual Federal budget to include Federal obligations from the bailout of AIG and other failed businesses.
“President Obama has said that an honest budget should include the costs of fighting the wars in Iraq and Afghanistan. An honest and transparent budget should not ignore the trillions of dollars in financial risk the Federal government has taken on by intervening in markets and backing failing companies.”
“We heard today that the Federal Government has invested over $180 billion in the bailout of AIG and the result is control of a $6 billion company and significant risks. Taxpayers have already been taken to the cleaners, but the Federal government shouldn’t paper over the very real financial risks this intervention has created and continue to perpetuate a shadow national debt.”
“To take just one example, since the Federal government stands behind Citigroup, Citigroup’s $1.6 trillion debt is also the Federal government’s debt. If accounted for properly, the outstanding debt of Citigroup alone would increase the national debt by some 15 percent and would effectively double the federal budget deficit overnight,” Issa said.
Issa made his call for honest budgeting in the financial crisis following a hearing featuring AIG CEO Edward Liddy, the three AIG trustees who control 80% of the stock on behalf of the Treasury, and George Mason University Law Professor J.W. Verret.
Professor Verret noted that the United Kingdom’s bailout of the Royal Bank of Scotland and Lloyd’s Banking Group resulted in the budget inclusion of over $2 trillion in potential liabilities. This more than doubled the U.K.’s national debt.
For more information on today’s AIG hearing click here.