The New York Times reports:
Starting in November 2008, the Federal Reserve Bank of New York under Timothy Geithner began urging American International Group, the huge insurer that the government had bailed out, to limit disclosure on payments made to banks at the height of the financial crisis. . .
The e-mail exchange between the bailed-out insurance giant and its regulator portray a strange reversal of roles, with A.I.G. staff arguing for the disclosure of certain details on payments for credit-default swaps to major banks, only to be discouraged by officials at, or representing, the Federal Reserve. . .
In a draft of one regulatory filing, A.I.G. stated that it had paid banks . . . the full value of C.D.O.’s, or collateralized debt obligations, that they had bought from the company. In the response to that draft from the law firm Davis Polk and Wardwell, which represented the New York Fed, that crucial sentence was crossed out, and did not appear in the final version filed on Dec. 24, 2008.
By the end of that month, A.I.G. had become the proxy in a tug-of-war between government agencies, with the Securities and Exchange Commission asking the company to revise its disclosure, which the regulator saw as falling short of full compliance.
Geithner’s appointment keeps looking worse and worse.
(Via the Corner.)