New York Fed Faces House Subpoena Over AIG Bailout Payments

Hugh Son
Bloomberg
Wednesday , January 13th, 2010

The Federal Reserve Bank of New York may be forced to deliver documents related to American International Group Inc.’s government bailout after the chairman of a House oversight committee said he would issue a subpoena.

Edolphus Towns, the New York Democrat who runs the Oversight and Government Reform Committee, said yesterday in a statement that he would issue a subpoena for New York Fed records concerning the decision it made to fully reimburse AIG’s partners. Banks including Goldman Sachs Group Inc. and Societe Generale SA were among beneficiaries of AIG’s rescue, called by lawmakers a “backdoor bailout” for financial firms.

The New York Fed, run by Timothy Geithner when AIG was rescued, had resisted since November calls to provide documents without a subpoena, Darrell Issa of California, the ranking Republican on the oversight committee, said yesterday in a letter. The New York Fed asked AIG to withhold the disclosure of information about the bank payments to the public, according to e-mails provided by Issa to Bloomberg News last week.

“This subpoena will provide the committee with documents that will shed light on how and why taxpayer dollars were used for a backdoor bailout,” Towns said in his statement.

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