AIG Bailout Information Suppressed By The Fed?

For the second time in a week, the Federal Reserve was accused by a member of Congress on Tuesday of blocking the public release of information about the bailout of the American International Group. (NYSE: AIG).

In response to the accusation by Representative Darrell Issa, the ranking Republican member of the House Oversight and Government Reform Committee, the chairman of the committee said that he would subpoena the New York Fed for the documents that it did not want released. Those documents were collected last year for a government audit of how $30 billion of taxpayer money wound up with A.I.G.’s trading partners.

Last week, e-mail messages emerged showing how the New York Fed had recommended that A.I.G. not disclose certain information in regulatory filings. The Fed has said it had valid reasons and merely deleted irrelevant information. It said the New York Fed president at the time, Timothy F. Geithner, was not involved.

A large part of Obama’s successful Presidential Campaign in 2009 hinged on the promise to bring probity, transparency and accountability in the US financial system. AIG related accusations against the Fed are certainly not helping this cause and need to be addressed fast and conclusively.

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