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WALZ LETTER SPURS TARP INSPECTOR GENERAL REVIEW
Questions about AIG’s practice of counterparty payments result in audit of practices
For Immediate Release
May 21, 2009
Contact: Meredith Salsbery
507-388-2149
WASHINGTON D.C. —A letter sent by Congressman Tim Walz and 26 fellow members of Congress to Mr. Niel Barofsky, Special Inspector General for the Troubled Assets Relief Program (TARP) has resulted in an audit into counterparty payments made by AIG with federal Wall Street bailout funds provided through the TARP program. Walz and his colleagues questioned why AIG supposedly paid counterparty claims at 100 percent of face value when most institutions were renegotiating and providing only partial payments to close out claims. Additionally, the letter requested information about the health and total exposure risks of the counterparties who received payments from AIG.
“Local banks, car dealerships and many small businesses across America are hurting and are taking so-called ‘haircuts’ on the debts owed to them every day. Yet AIG took taxpayer dollars and paid its obligations in full to big financial firms like Goldman Sachs and Barclays,” said Walz. “Goldman Sachs told us they had no material exposure to AIG. If this is true, then why were their paid in full? We’re all sacrificing at this time of financial hardship and I think it is a small request to ask that a firm with no risk take a reduced amount to settle the debts AIG owes.”
“My colleagues and I have asked the Special Inspector General to investigate whether paying these counterparty obligations in full was in the best interest of taxpayers who provided the funding and also in the best interests of re-establishing long term economic stability,” continued Walz. “I’m pleased that the Inspector General agrees and that there is going to be a thorough audit to hold AIG accountable for how it spent the Wall Street bailout funds.”
Text of the letters is attached. For more information on AIG’s practice of making counterparty payments in full, click here.
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