Wednesday, April 28, 2010

AIG TARP Coverup Could Lead to Charges Against N.Y. Fed and Geithner

Neil Barofsky, head of the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) says the secrecy that enveloped the AIG deal was unwarranted, and says that the probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

As a side note, after Mr. Barofsky started investigating TARP, his office was moved to the basement three floors below U.S. Treasury Secretary offices, and was soon hit by the stench of flooded sewage.

Bloomberg reports that in a Senate Finance Committee testimony on April 20, Mr. Barofsky said SIGTARP would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the infamous instrument underwritten by GS. "Barofsky and Geithner’s offices have gone toe-to-toe over AIG, alleged lax oversight of TARP funds and even over the question of whom Barofsky reports to".

Mr. Barofsky has been in contact with the SEC and says that “We’re going to coordinate with them, but we’re going to lead the charge. We’re going to review these transactions.”

Barofsky says he’s also looking into possible insider trading connected to TARP. For example, he says his agency would want to know if bankers bought stock in their companies before it was made public that their institutions would get TARP money.

“There was a time when, if you got that word the stock price would go up, and if you were to trade on that information prior to the public announcement, that would be classic insider trading,”

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