You Own AIG! Pay attention!

We endured eight years of "responsibility" with no consequence to the Deciders. More and more it seems the only additional protection the investment banks and their creditors should be given is protective custody.


LETTER TO NEIL BAROFSKY FROM MEMBERS OF CONGRESS

(The following is a reformatted version of a letter to the Office of the Special Inspector General Barofsky for the Troubled Assets Relief Program from 27 members of Congress.

March 25, 2009

The Honorable Neil M. Barofsky Office of the Special Inspector General for the Troubled Assets Relief Program 1500 Pennsylvania Avenue, NW, Suite 1064 Washington, DC 20220

Dear Inspector General Barofsky:

After reviewing the documents released by American International Group, Inc. (“AIG”) regarding the identity of counterparties to certain transactions who received taxpayer “bailout funds,” we find that they raised more questions than they answered.

Congress and the American people were told that the AIG bailout was necessary to limit systemic risk across the global economy. Using bailout funds, AIG in turn paid various debts to the counterparties to its various transactions. Apparently, all claims were paid at 100 percent of face value, including swap-related claims.

We would like to know if assessments were made of the health and total exposure risks of counterparties, such as Goldman Sachs (which, for example, claimed it had no material exposure to AIG), Barclays, Deutsche Bank and others. If such assessments were made, by whom were they made and what were the criteria guiding the assessments?

Further, was any attempt made to renegotiate and close out these contracts with “haircuts?” If not, why not? What was the benefit of the decision to pay 100 percent of face value to the American taxpayers who provided the bailout funds and how did it support the goal of ensuring the stability of the economic system?

In essence, we would like to know if the AIG counterparty payments, as made, were in the best interests of the taxpayers who provided the funding and in the best interests of re-establishing long-term economic stability.

SIGTARP was created to investigate the uses of TARP funding, and AIG is among the largest recipients of TARP funding, and the largest recipient of government aid during the crisis. We believe that an investigation into the AIG counterparty payments is a critical component of the oversight effort. As the holder of nearly 80% of the equity in AIG, the U.S. government has a fiduciary obligation to manage this investment in a prudent manner, and your role is crucial to the protection of the taxpayers’ rights as AIG’s “shareholders.” We look forward to your response to the above questions.

Sincerely,

Elijah E. Cummings, et al.


John Barnyak
President
www.stonehouseasset.com