December 02,2009

Grassley asks Treasury and NY Fed for accounting of developments in bailout of AIG

WASHINGTON – Senator Chuck Grassley has asked Treasury Secretary Timothy Geithner and the President and CEO of the Federal Reserve Bank of New York, William Dudley, questions about the government’s handling of its bailout of American International Group, or AIG, the largest underwriter of commercial and industrial insurance in the United States.

In a letter sent to both Geithner and Dudley, Grassley asked for an assessment of how taxpayers get a better deal from holding AIG equity instead of debt, following yesterday’s announcement by the New York Fed that AIG retired $25 billion of debt by providing the New York Fed with shares in two AIG subsidiaries.
Grassley also asked for an explanation of why the Treasury Department this year changed the AIG preferred stock from “cumulative,” where missed dividends must be paid at a later date, to “non-cumulative,” where they need not be paid at all. Finally, Grassley asked for a report from the Treasury Department of the criteria and process it is using to select at least two members of the AIG board of directors that the Treasury Department will be appointing because AIG missed its fourth consecutive dividend payment owed to the Treasury Department earlier this year.

“Given the more than $120 billion in taxpayer money that’s been put on the line for AIG, the public deserves answers to these basic questions,” Grassley said.