Updated with stock price moves
NEW YORK (
American International Group
shares were trading higher Wednesday as the insurer's rescue and counterparty payments were under the microscope on Capitol Hill.
initially traded lower Wednesday after Treasury Secretary Timothy Geithner told the House Oversight and Government Reform Committee that he had no role in making decisions to suppress disclosures of information involving the troubled insurer's rescue and payments made to its counterparties.
AIG paid out over $60 billion to more than a dozen banks across the globe to resolve credit default swaps, a type of insurance against losses on mortgage debt. The New York Federal Reserve Bank, which was in charge of the AIG bailout, advised AIG not to reveal the information about counterparty risks.
"We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses," Geithner said about the rescue of AIG during his testimony Wednesday.
Geithner added that he withdrew from involvement in monetary policy decision, policies involving individual institutions, and day-to-day management of the New York Fed on Nov. 24 after President Obama announced his intent to nominate Geithner to the position of Treasury Secretary.
answered questions about the role of the Fed in AIG's transactions in a letter to Rep. Darrell Issa (R., Calif.). Bernanke wrote that he was not directly involved in the negotiations with the counterparties.
After opening to the downside, AIG shares reversed ground and were lately up 22 cents, or 0.9%, to $24.62.
, which was among the biggest beneficiaries of AIG's counterparty payments, was trading flat after Rochdale Securities analyst Dick Bove said investors in the bank should not panic over new regulations introduced by President Obama, which intend to restrict banks from proprietary trading and owning, investing or sponsoring hedge funds or private-equity funds. Bove argues that the rules will likely not pass as introduced.
"The reason it will not be passed is because the government cannot afford to let it happen," Bove wrote. "By shrinking the banks the government loses access to what would be one of the biggest untapped funding sources for Treasury debt in the world. Who will buy the huge Treasury offerings if banks are broken up? Is the U.S. going to hand over its fund raising activities to foreign banks and foreign governments? This would be tantamount to giving up its sovereignty."
Goldman Sachs shares, which have dropped 8% over the last month, were flat at $150.88.
Among other bank stocks,
gained 2.1% to $3.22,
Bank of America
climbed 2% to $15.07,
rose 1.3% to $27.34, and
tacked on 1% to $38.82.
Most regional bank stocks were also trading higher, led by a 2.8% advance in shares of
. Rochdale's Bove upgraded the stock to buy from neutral and increased his price target to $32 from $24. Bove also upped his 2010 and 2011 full-year earnings targets.
"The company is nearing the point where these improvements are likely to impact non-performing loans, and foreclosures," Bove wrote. "The impact on earnings when this occurs
will be pronounced."
BB&T shares were up 2.7% to $27.52. Among regional banks,
gained 4.8% to $4.82,
advanced 2.3% to $6.22,
Fifth Third Bancorp
climbed 2.2% to $11.97, and
rose 1.6% to $24.
-- Written by Robert Holmes in Boston
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