Earlier today, the agency auditing America’s bank bailout funds—or the Office of the Special Inspector General for the Troubled Asset Relief Program, if you prefer—published a report about AIG. Specifically, the agency details the efforts of the New York Federal Reserve to negotiate with banks on the other sides of AIG’s ill-fated trades in the credit default swap market.

As the agency describes it, up to US$30bn was authorised in November 2008 to purchase the rapidly souring collateralised debt obligations on which AIG’s trades were based. In the end, US$27.1bn was paid to AIG’s counterparties for the assets. They were also allowed to keep US$35bn in collateral that AIG posted before the government-funded vehicle bought out the contracts.

“Questions have been raised,” the report notes, about whether the deal constituted a “backdoor bailout” of banks that did business with AIG. This remains a contentious issue because the government—as described in great detail in the report—was unable to force “haircuts” on the price of the assets acquired and, even worse, because the majority of beneficiaries from the deal were foreign. (It also didn’t help that the largest domestic recipient was Goldman Sachs.)

Although the sums have been reported before, seeing Société Générale at the top of the list of banks to rake in funds funnelled “inexorably and directly” from US government coffers—quelle horreur!—is reigniting criticism of Timothy Geithner, president of the New York Fed during the AIG affair and now US treasury secretary.

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