Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program (SIGTARP), has again leveled heavy criticism upon Federal Reserve officials for their mishandling of the American International Group (AIG) collapse. This criticism extended to Obama administration Secretary of the Treasury Timothy Geithner, who was president of the New York Federal Reserve Bank (NY Fed) at the time of the AIG collapse. The SIGTARP report criticizes the deal cut with counterparties to AIG Credit Default Swap (CDS) products. The special inspector general expressed displeasure with how the NY Fed entered negotiations with a less-than-robust attitude. Members of Congress asked the SIGTARP to investigate why the NY Fed underestimated the depth of AIG's trouble and why the NY Fed did not drive a harder bargain when dealing with the counterparties. In addition to the CDS situation, NY Fed officials worried about another particularly nasty bit of business lurking on AIG's books.
BACK FROM THE ABYSS Kevin P Hennosy Rough Notes; Jan 2010; 153, 1; Docstoc pg. 48 Reproduced with permission of the
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