The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. NEW YORK ( TheStreet) -- In the midst of the Greek crisis, a report was issued last week by a watchdog government agency assessing how the Federal Reserve handled the AIG crisis. Remember that one? At one point, the Feds had ponied up $182.3 billion to save AIG ( AIG). And let's put this in perspective: so far, the ECB/IMF has only agreed to a $151.5 billion bailout for Greece. But it is interesting. The European governments convinced the banks to settle for 50 cents on the dollar. AIG? The U.S. government insisted that AIG pay its creditors in full. Let's take a moment to refresh our memories on AIG.
The following comes from an article I wrote in April 2010: 1. On July 10, 2006, Henry Paulson left his job as CEO of Goldman Sachs ( GS) to become Secretary of the U.S. Treasury. Keep in mind that Goldman Sachs was a major client of AIG.
2. In mid-Sept. 2008, Treasury Secretary Paulson and Timothy Geithner, then head of the Federal Reserve Bank of New York (FRBNY), met with senior executives of AIG in the Bank's headquarters in New York. The only outsider in that meeting was Lloyd Blankfein. Blankfein replaced Paulson as CEO of Goldman Sachs. 3. As I reported in a March 2010 article, Goldman had a large stake in AIG's survival: an insurance claim for guaranteed asset-backed securities of almost $13 billion. That meeting resulted in an $85 billion credit line from the FRBNY later in Sept. 2008. 4. Why the FRBNY and not TARP? TARP was not enacted until Oct. 3, 2008. AIG was effectively insolvent without the FRBNY credit. But with it, the AIG staff believed it could settle claims at 60 cents on the dollar and was prepared to start negotiating on that basis. But then, two things happened: 1. The FRBNY instructed AIG to pay off claims in full; 2. The FRBNY did everything it could to keep the names of who was getting paid off out of the AIG reports to the SEC. It hoped the SEC would accept a total amount paid without the names of who got paid. But the SEC was insistent. Details were finally released on March 15, 2009. The following table details who got paid what from AIG (billions of US$):