The U.S. Treasury said in a draft of a presentation that its $40 billion investment in the American International Group bailout was “highly speculative,” reports Bloomberg. Judicial Watch, a group that advocates government transparency, obtained the documents through the Freedom of Information Act. “The prospects of recovery of capital and a return on the equity investment to the taxpayer are highly speculative,” according to the first of the two Treasury slides. Treasury Secretary Timothy Geithner told Congress in March that AIG was saved last year to prevent “catastrophic damage” to economic markets. The company still owes the Federal Reserve about $39 billion on a credit line after announcing more than $9 billion in asset sales. The Treasury documents were turned over last month in response to a March FOIA request from Judicial Watch, according to Chris Farrell, director of investigations at the Washington-based organization. “Why do you take out the fact that we are taking on risks for the taxpayers that are both huge and highly uncertain?” said William Black, associate professor of economics and law at the University of Missouri-Kansas City and a former U.S. bank regulator. “The last thing you want to spread is a culture in which people aren’t being absolutely blunt.”
Treasury Document Called AIG Investment ‘Highly Speculative’
In a draft of a presentation, the U.S. Treasury said that its $40 billion investment in ailing AIG was “highly speculative,” leaving critics asking why the government went through with the bailout.
August 28, 2009