Oversight Republicans Release Report on AIG Backdoor Bailout and Fed Cover Up

January 26, 2010

Report entitled, “Public Disclosure As A Last Resort: How the Federal Reserve Fought to Cover Up the Details of the AIG Counterparties Bailout From the American People.”

WASHINGTON D.C. – Today, Oversight and Government Reform Committee Ranking Member Darrell Issa (R-CA) released a report detailing the role of the Federal Reserve in the AIG Counterparty payments where billions of taxpayer dollars were used to pay Wall Street Banks in what has been termed a “backdoor bailout.”

The report is the result of a staff investigation into the Federal Reserve’s decision to pay AIG counterparties 100 cents on the dollar for credit default swaps that were worth far less while going through great lengths to keep the deal hidden from Congress and the American people.

“The 250,000 documents we received from the New York Fed paint a startling picture,” said Rep. Darrell Issa (R-CA). “It is clear that the financial elites at the Federal Reserve felt it was more important to take care of wealthy Wall Street firms than to protect the taxpayer investments. Fed Officials mocked the idea of transparency while doing everything they could to ensure the public never knew about the billions they funneled to private firms.”

Released in advance of Treasury Secretary Timothy Geithner’s appearance before the Oversight and Government Reform Committee, the report details the weak attempt by New York Fed Officials to negotiate with AIG’s Counterparties, the decision to pay the counterparties 100 cents on the dollar, or “par,” and the cover-up that ensued as the New York Fed attempted to keep the deal secret.

Click here to read the report.

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