That AIG is a giant sink-hole for taxpayer dollars is no secret now. But that’s not what Washington communicated last year, maintaining that the bailout of AIG was an investment that would be paid back.
New documents show, however, that Washington never really believed what it was saying, and that the “this is an investment” rhetoric was just to make the gigantic bailout more palatable. Conservative watchdog group Judicial Watch just dug up some juicy Treasury documents on Washington’s bailout of AIG.
The documents, obtained through a FOIA request, include internal Treasury emails, presentation slides and articles outlining the details of the government’s “investment” in AIG, which at the time totaled as much $152 billion.
“Clearly Treasury Department officials felt strongly that the $152 billion ‘investment’ in AIG would not be recovered by the taxpayers. And it appears someone at Treasury did not want the risky nature of the deal to be relayed to the American people,” said Judicial Watch President Tom Fitton in a statement. “These documents show that some government officials recognise their responsibility to measure the effectiveness of their TARP investments. Yet the American people are misinformed and remain in the dark about how their money is being spent.”
1. A series of presentation slides detailing bailout terms. Included is a slide titled “Investment Considerations.” On the slide the words, “The prospects of recovery of capital and a return on the equity investment to the taxpayer are highly speculative” are crossed out by hand:
2. An outline that describes the strict controls “imposed” on AIG as a condition of the cash infusion, including those related to private executive compensation and corporate expenses. On the bottom of the third page, it notes that the government’s corporate expense policy “…shall remain in effect at least until such time as any of the shares of the Senior Preferred are owned by the UST (United States Treasury). Any material amendments to such policy shall require the prior written consent of the UST until such time as the UST no longer owns any shares of Senior Preferred.”
3. A December 15, 2008 Treasury internal email from Jonathan Fletcher, Chief Interim Risk Officer for TARP, revealing the existence of an internal government program to track the effectiveness of the AIG bailout. Fletcher writes: “As you know, we are obligated by EESA (Emergency Economic stabilisation Act) to determine the effectiveness of TARP investments…We would propose to follow up on the TARP investment by preparing a risk assessment note that spells out the objectives…and then create both a benchmark for AIG today and then establish metrics to track AIG’s progress (or lack thereof) in coming months.” As Judicial Watch notes, no documents related to this government tracking program have been released to the public.
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