|AIG ships billions in bailout abroad
Politico | March 16, 2009
Billions of American taxpayer dollars used to bailout insurance giant AIG are flowing to some of the largest foreign banks in the world, according to new documents released by beleaguered company Sunday.
The revelation seemed sure to cause political complications for President Barack Obama and his economic team, already on the defensive Sunday over why they couldn’t stop AIG from doling out $165 million in bonuses to some of its top corporate officials — even as the company was receiving a massive infusion of taxpayer funds.
The documents AIG released account for some of the more than $180 billion in aid that AIG has received, and they detailed for the first time which financial firms are benefitting from the federal handout.
In all, AIG disclosed payments of $105.3 billion between September and December 2008. And some of the biggest recipients were European banks. Societe Generale, based in France, was the top foreign recipient at $11.9 billion, Deutsche Bank of Germany got $11.8 billion and Barclays, based in England, was paid $8.5 billion.
Here in the U.S., Goldman Sachs received $12.9 billion. Edward Liddy, the government-installed CEO of AIG, sat on the board of directors of Goldman Sachs until he joined AIG.
He took the position while President George W. Bush's Treasury Secretary, Henry Paulson — who until joining the administration had served as Goldman's chairman and CEO — arranged the insurance company's initial government bailout.
The disclosure of US taxpayer money going to foreign banks rankled some analysts. “These revelations raise serious questions about the extent to which U.S. taxpayers are being asked to bail out foreign banks,” said James Rickards, the senior managing director for market intelligence at Omnis, an applied research organization. “Why were French and German authorities not asked to pick up the tab for their portion of potential AIG losses?”
Political pressure is also building on AIG, as House Speaker Nancy Pelosi on Sunday called on AIG executives to “renounce” their bonuses and refuse retention pay, and said that House Financial Services Chairman Barney Frank would “examine options that are legally available to recover taxpayer funds of companies that abuse the privilege of taxpayer assistance.”
The House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises has called on Liddy to testify before the committee on Wednesday.
The full list disclosed by AIG can be found here.
That’s information that members of Congress and media outlets have been trying to get either AIG or the federal government to divulge since last year. The U.S. government now holds a majority stake in the bank.
AIG has resisted disclosure of the so-called counterparties who were at the other end of the firm’s complicated financial transactions. The company argued that such information was proprietary and private. And the Bush and Obama administrations also declined to divulge the information. But some in Congress pushed hard for it, insisting that taxpayers had a right to know which companies were benefiting from bailout money.
“Our decision to disclose these transactions was made following conversations with the counterparties and the recognition of the extraordinary nature of these transactions,” said Liddy.
Additional reporting by Lisa Lerer.