Thursday, June 18, 2009

The I G Firing Mess Gets Messier

The Walpin thing is only Part One. Treasury's TurboTaxTimmy is having a pitched battle with the Treasury I.G.--and the blood is in the water. It's TurboTaxTimmy's blood, folks.

ABC's Tapper reports:

The Obama administration’s disputes with government watchdogs do not end with fired Inspector General Gerald Walpin. Behind the scenes, the Treasury Department is embroiled in a disagreement with Neil Barofsky, the watchdog for the $700 billion government bailout Troubled Asset Relief Program, or TARP

Got that?

Explicating a bit, NRO quotes the NYTimes:

Members of Congress and the New York State attorney general demanded detailed information Thursday on how tens of billions of taxpayer dollars flowed through the American International Group during its crisis last fall and ended up in the coffers of several dozen big banks, shielding them from losses...

''We would like to know if the A.I.G. counterparty payments, as made, were in the best interests of the taxpayers who provided the funding,'' said Representative Elijah E. Cummings, Democrat of Maryland, in a letter to Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program. The letter was also signed by 26 other members of the House, all of them Democrats.

The representatives asked Mr. Barofsky to find out who had made the decision to shield A.I.G.'s trading partners from any losses during last fall's crisis, and what factors had shaped the decision.

Their letter mentioned that Mr. Barofsky's office had been created to investigate the uses of TARP money, and that A.I.G., the biggest recipient of government aid in recent months, was among the largest recipients of money from the TARP.

This would not be the first time AIG counterparty payments were questioned. See Ritholtz' rants on the topic, or those of Market Ticker.

Cui bono? Who benefits from AIG counterparty payments?

Names like Goldman, Sachs (Hank Paulsen's alma mater) and a bunch of European banks have been floated.

IF it is the AIG thing, expect NYState AG Cuomo to be all over this like flies on garbage.

And expect that TurboTaxTimmy will be looking for work.

HT: McCain

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