When the government began rescuing it from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks ? including Goldman, Soci?t? G?n?rale, Deutsche Bank and Merrill Lynch ? over any irregularities with most of the mortgage securities it insured in the precrisis years.
But after the Securities and Exchange Commission?s civil fraud suit filed in April against Goldman for possibly misrepresenting a mortgage deal to investors, A.I.G. executives and shareholders are asking whether A.I.G. may have been misled by Goldman into insuring mortgage deals that the bank and others may have known were flawed.
Unknown outside of a few Wall Street legal departments, the A.I.G. waiver was released last month by the House Committee on Oversight and Government Reform amid 250,000 pages of largely undisclosed documents. The documents, reviewed by The New York Times, provide the most comprehensive public record of how the Federal Reserve Bank of New York and the Treasury Department orchestrated one of the biggest corporate bailouts in history.
The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts. That decision, say critics of the A.I.G. bailout, has cost taxpayers billions of extra dollars in payments to the banks. It also contrasts with the hard line the White House took in 2008 when it forced Chrysler?s lenders to take losses when the government bailed out the auto giant.
?The defense may be that the banking system was in trouble, and we couldn?t afford to destabilize it anymore, but that just strikes me as really going overboard.?
?This really suggests they had myopia and they were looking at it entirely through the perspective of the banks,? Mr. Skeel said.
I guess its easy to look through only the perspective of your larger investors....