Documents show Societe General refused AIG concessions
Federal Reserve Bank of New York counsel Thomas Baxter thought it an abuse of power to make AIG pay less than 100 cents per dollar to its bank counterparties and was surprised that details became public, Dow Jones reports.
Internal documents show that NY Fed officials believed they had the right to keep the deals secret.
They also show that banks refused any concessions, especially Societe Generale - with backing by the French government. Paying foreign counterparties whole while using regulatory power to make domestic banks accept less than 100% would have been unfair.
By early November, New York officials had given up trying to win concessions.
Special security
The New York Fed was offered "special security procedures" to handle a document revealing the agreements with the counterparties.
These included: "limiting the staff who could review it to two; keeping it in a locked safe during the review process; and, assuming a favorable determination, providing for its storage in a special area at the SEC where national security related files are kept."
Command and control
Reuters added that Republican senator Darrell Issa said: "It has become alarmingly clear that public disclosure was the last thing on the minds of the government officials charged with protecting the taxpayers' interests.”
Congressman Issa, one of the harshest critics of the bailout, said the New York Fed had assumed "a command and control relationship with AIG" and that it had sought to limit AIG's disclosures about the rescue, Reuters said.
AIG stock falls again
Bloomberg reported that AIG’s boss Robert Benmosche became the fourth consecutive chief executive officer to preside over a stock decline at the insurer last week when its stcok fell to $26.50.
It was $27.14 on the last trading day before Benmosche replaced Edward Liddy. The shares have dropped 98 percent under the four CEOs who ran the firm since Maurice “Hank” Greenberg resigned in 2005.
Last week, however, the Dow Jones fell across the board due to fears that Democrats may oppose the reappointment of Ben Bernanke to the Federal Reserve, prompting President Obama to ring round for support on Saturday.
