Key House lawmakers are calling for a probe of allegations that AIG (AIG) is striking a tougher stance in settling obligations with U.S. banks, while going easier on foreign ones.
Rep. Barney Frank (D., Mass.), chairman of the House Financial Services Committee, on Wednesday wrote to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke and asked that they look into the allegations brought by Rep. Spencer Bachus (R., Ala.), the committee's ranking Republican.
"I have been informed that, in contrast with its treatment of foreign banks, AIG is now attempting to force many of its creditors that are U.S. banks to accept severe reductions in the debt that is owed to them," Bachus writes in a letter to Frank.
About $100 billion in taxpayer money has flowed through AIG to its counterparties, and a majority of it went to foreign institutions, Bachus writes. AIG's largest payouts following its bailout went toGoldman Sachs (GS), Bank of America (BAC) via its purchase of Merrill Lynch, Deutsche Bank (DB) and Societe Generale (GLE).Smaller payments went to a host of other banks, including Morgan Stanley (MS) and Royal Bank of Scotland (RBS).
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