E-mails reveal N.Y. Fed told AIG to limit disclosure

The Federal Reserve Bank of New York asked bailed-out American International Group to delay public disclosure of its billion-dollar payouts to big financial firms during the height of the financial crisis, e-mail exchanges show.

AIG eventually revised public filings after the Securities and Exchange Commission requested more information and, under pressure from Congress, disclosed the banks' names.

Under the guidance of the New York Fed, then led by Timothy F. Geithner, AIG paid in full what it owed to a number of big banks, such as Goldman Sachs and Deutsche Bank. The lawmaker who released the e-mails accused the New York Fed of masking the transactions to hide what were essentially back-door bailouts. The payments followed the government's decision to rescue AIG with a $180 billion aid package.

"It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information," said Rep. Darrell Issa (R-Calif.). Taxpayers deserve full "disclosure under our nation's securities laws, not the withholding of politically inconvenient information."

Thomas Baxter, the New York Fed's general counsel, said in a statement that the final decision on disclosure rested with AIG. "All information was in fact disclosed that was required to be disclosed by the company, showing that counterparties received par [or full] value. There was no effort to mislead the public," he said.

Issa and others on Capitol Hill said they plan to hold hearings and may ask Geithner to testify. A Treasury spokeswoman said Geithner, now the Treasury secretary, played no role in the decisions because he was a candidate for the Treasury post at the time and had recused himself. The e-mail exchanges were reported by Bloomberg News.

In one Nov. 24 exchange, AIG's in-house attorney Kathleen Shannon told the New York Fed that the firm wanted to disclose details about Maiden Lane III, an entity the Fed created to help the insurer shed bad mortgage derivatives.

"Do you think it might be feasible to hold off . . . until next week?" responded Brett Phillips, a New York Fed lawyer. "The thinking is that the Maiden Lane III closing will be a less transparent event." The information was released Dec. 2.