U.S. watchdog probes AIG post-bailout payments to banks
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The government’s bailout of American International Group last fall also was a bailout of major Wall Street banks that were owed money by the insurance giant, including for credit default
swap contracts.
Now the chief watchdog of the federal financial rescue wants to know whether the payments AIG made were justified, or whether they could have been reduced via negotiation.
AIG on March 15 revealed which banks and other creditors were paid off last fall after the company, on the brink of failure, got an $85-billion loan from the Federal Reserve to make good on
what it owed. Among the banks that received billions in payments were Goldman, Merrill Lynch & Co., Germany’s Deutsche Bank and France’s Societe Generale.
The size of the AIG bailout has since doubled, and taxpayers now own 80% of the company.