New York Fed Faces House Subpoena Over AIG Bailout

Hugh Son
Bloomberg News
Tuesday, January 12, 2009

Jan. 12 (Bloomberg) — The Federal Reserve Bank of New York
will be compelled to hand over documents related to American
International Group Inc.’s government bailout after a House
oversight committee chairman said he will issue a subpoena.

“To help the committee’s investigation of payments made
by AIG to its counterparties, I am issuing a subpoena today to the
Federal Reserve Bank of New York,” Edolphus Towns, the New York
Democrat who runs the Oversight and Government Reform Committee, said
in an e-mailed statement. “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’ attempt to force the New York Fed to provide documents
comes after the ranking Republican on the committee, Darrell Issa of
California, obtained e-mails showing the regulator pushed AIG to
withhold information from public filings about payments to banks. The
New York Fed in November declined to provide some documents Issa was
seeking without a subpoena, Issa said in a letter to Towns today.

Treasury Secretary Timothy Geithner, who was president of the New
York Fed when AIG was rescued, had been asked by Towns to testify
during hearings scheduled for next week. The New York Fed’s
general counsel, Thomas Baxter, said last week that Geithner
wasn’t aware of efforts to limit New York-based AIG’s
bailout disclosures because he didn’t think the issue merited
Geithner’s attention.

Full story here.