Following calls from their fellow senators, Banking Committee Chair Chris Dodd and Ranking Member Richard Shelby slammed the Federal Reserve for refusing to release the names of the counterparties to the A.I.G. bailout. The counterparties are the ones who are actually receiving the majority of the bailout money.
During a committee hearing this morning on A.I.G.’s problems, Dodd stated clearly that “it is not clear who we are rescuing.” The counterparties were not “innocent victims” and the public “has a right to know” who is receiving the bailout funds sent through A.I.G.
When questioned, Federal Reserve Vice Chairman Donald Kohn refused to release the names of the counterparties because it could “make companies less likely to do business with anyone receiving government funds, risking further turmoil at AIG and in financial markets more broadly.”
Dodd and Shelby both laid into Kohn, telling him his statement was “not adequate” and “very disturbing.” Shelby further stated, “People want to know what you’ve done with this money.”
You can watch the full committee hearing here.
UPDATE: Should also point out this moment from Sen. Jim Bunning:
“You are telling us,” he said sternly to Mr. Kohn, “that the counterparties that got par for their bonds or for whatever — the American taxpayer shouldn’t know who they are? And then you may come back to us and ask for more money for more banks and more corporations? You will get the biggest ‘no’ you ever got.”
He added that he would do everything in his power to “stop you from wasting the taxpayers’ money on a lost cause.”
A.I.G. counterparty transparency is quickly becoming a bipartisan populist issue. Who will drop a bill to force the disclosure?