US Rep Cummings To Seek Probe Into AIG Counterparty Payments
March 24 2009 - 4:54PM
Dow Jones News
The inspector general in charge of the government's bailout of
AIG is being asked to probe why the troubled insurer paid out
billions of dollars in bailout funding to trading partners.
Rep. Elijah Cummings, D-Md., will ask in a letter to investigate
why Goldman Sachs Group Inc. (GS) received $13 billion from
American International Group Inc. (AIG). Goldman, along with other
international banks, received the money as part of ongoing
contracts with AIG.
The letter is the latest example of pressure U.S. lawmakers are
putting on AIG. Anger in Congress and the public has focused on
AIG's plan to pay $165 million in bonuses to employees of a unit
that caused billions in losses for the company, leading to its
bailout by the federal government.
Cummings has asked 23 other members of Congress to sign the
letter. Among the questions he wants answered is why Goldman needed
the cash since the investment bank claimed it wouldn't have lost
money if AIG had failed.
Goldman Sachs maintained in a recent conference call that AIG
remains a trading partner, and that roughly $8 billion of the money
it had received was owed to it as collateral. The balance was owed
to it under a securities lending agreement.
-By Joe Bel Bruno, Dow Jones Newswires; 201-938-4047;
joe.belbruno@dowjones.com