Towns to subpoena New York Fed for documents on AIG bailout secrecy

New York Fed to be subpoenaed for AIG bailout docs

WASHINGTON — The Federal Reserve Bank of New York faces a congressional subpoena into bailout decisions made under the leadership of now-Treasury Secretary Timothy Geithner.

Rep. Edolphus Towns, D-N.Y., said Tuesday he will subpoena the New York Fed for documents related to the bailout of failed insurer American International Group Inc. Towns chairs the House Oversight and Government Reform Committee.

The committee is investigating details of deals that sent billions of AIG bailout dollars to banks including Goldman Sachs Group Inc. New York Fed lawyers told AIG not to disclose details of the deal, according to e-mails released last week by California Rep. Darrell Issa, the committee’s top Republican.

Issa asked Towns to subpoena the New York Fed after the Federal Reserve blocked a separate request for documents.

The Fed told the special inspector general for the financial bailout not to provide documents Issa had requested as part of his investigation.

Geithner was president of the New York Fed when it was managing the AIG bailout. AIG paid billions of dollars to banks including Goldman, Societe Generale and Deutsche Bank to cancel complex financial deals.

The special inspector general wrote a report criticizing Geithner for going too easy on AIG’s business partners and questioning the Fed’s refusal to name them. It said taxpayers may have paid billions more than necessary because Geithner did not demand concessions.

The Federal Reserve, the New York Fed and Treasury did not respond to requests for comment. A spokeswoman for the special inspector general would not elaborate on that office’s letter to Issa.