The Project On Government Oversight (POGO) wrote to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner today urging them to disclose the names of the counterparties that have benefited from the unprecedented bailout of the American International Group (AIG). Given the potential conflicts of interest arising from the large number of Goldman Sachs alumni who were involved in the government's bailout plan, POGO raised its concerns.
The Federal Reserve and Treasury Department have lent and invested billions of taxpayer dollars over the past several months to rescue AIG from collapse. Numerous media reports have revealed that a large portion of the government's exceptional assistance went to Goldman Sachs and other financial institutions that had purchased credit-default swaps from AIG. By refusing to disclose the full list of AIG's counterparties, the Fed and Treasury have fueled suspicions that the government's decisions were unduly influenced by favoritism and conflicts of interest, especially since many of the officials who have managed the bailout have a history of working for Goldman Sachs.
"If Chairman Bernanke and Secretary Geithner's goal is to instill confidence in their decisions, their secretiveness is undermining that goal. They both have pledged to Congress their commitment to transparency at their respective institutions, but now claim being more transparent will hurt public confidence," said POGO's Executive Director, Danielle Brian. "This kind of secrecy only fuels suspicions that the revolving door between Goldman Sachs and the government was the real motivation behind the AIG bailout."
In recent months, Chairman Bernanke and Secretary Geithner have refused to answer questions from Members of Congress about AIG's counterparties. POGO is calling on the Fed and Treasury to disclose the list of counterparties without delay, and to make the government's initiatives to stabilize the financial system more transparent overall.