The New York Timesreports that an audit of the Federal Reserve Bank of New York has revealed that the most influential regional reserve bank of the Federal Reserve System gave a “backdoor bailout” to A.I.G.’s banks. Neil M. Barofsky, the special inspector general for TARP, believes that “Tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.’s counterparties.” The report continues:
Mr. Barofsky said the facts also undermined the Fed’s arguments that banking secrecy was an essential part of bank stability.
“The default position, whenever government funds are deployed in a crisis to support markets or institutions, should be that the public is entitled to know what is being done with government funds,” he said.
“Audit Faults New York Fed in A.I.G. Bailout”
The New York Times reports that an audit of the Federal Reserve Bank of New York has revealed that the most influential regional reserve bank of the Federal Reserve System gave a “backdoor bailout” to A.I.G.’s banks. Neil M. Barofsky, the special inspector general for TARP, believes that “Tens of billions of dollars of government money was funneled inexorably and directly to A.I.G.’s counterparties.” The report continues:
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