The identities of the counterparties who stand to benefit from the government’s huge new bailout of AIG are remaining frustratingly secret, as Josh pointed out this morning, even as taxpayers ensure that AIG’s partners in deal-making get paid. But at least one member of Congress isn’t satisfied with the explanation coming out of the Federal Reserve and Treasury.
Sen. Ron Wyden (D-OR) pressed Fed Chairman Ben Bernanke hard in the Budget Committee this morning on the need to identify AIG’s bailed-out counterparties. After Bernanke replied that “under normal conditions, [the counterparties] would have presumption to privacy about their commercial decisions,” Wyden sounded extremely displeased:
I’ve asked you what the endgame is. You’ve said the situation is evolving. I’ve asked you why we can’t disclose the counterparties; could be anybody as far as I can tell in the world. And you’re saying you’re studying it.
I just hope that in the days ahead, the Fed is going to come clean as to why this is so essential. I think this is setting a precedent. I mean AIG is not an investment company; it’s an insurance company. Insurance companies in Oregon don’t take these kinds of risks and people want to know how we got into this situation and specifically, what’s being done to turn it around.
Another Democrat on the Budget panel, Sen. Mark Warner (VA), echoed Wyden’s criticism in a more mild fashion later in the hearing:
And I guess it just irks me a bit that we, the American taxpayers, are still basically asked to continue to total bail out all these counterparties when, at some point, I just believe they’re — and I understand the structural concerns, but there ought to be some haircut taken by these folks at some point in this process.
Whether it’s forcing the counterparties to accept a partial loss on their contracts with AIG, or disclosing their identities outright, it looks like some Democrats may drop legislation on this question in the coming days.