Bernanke: 'Huge Gap' Allowed AIG 'Hedge Fund,' Costing US Up to $200B
Testifying today at a Senate Budget Committee hearing in Washington, D.C., Federal Reserve Chairman Ben Bernanke said the financial products division of major insurance company had been operated like a hedge fund with virtually no government oversight.
The fact that American International Group Inc. then had to be rescued with four federal government bailouts that could total nearly $200 billion—the most recent one, including aid of up to $30 billion and relaxed terms concerning earlier assistance, was announced only this week, after AIG posted a stunning $100 billion loss for last year—made him “more angry” than any other episode of the financial crisis, Bernanke stated. He was responding to a question from Sen. Ron Wyden (D-Ore.), reports Bloomberg.
“AIG exploited a huge gap in the regulatory system; there was no oversight of the financial-products division,” the Fed chairman said. “This was a hedge fund basically that was attached to a large and stable insurance company.”
Additional coverage:
New York Times: “The Case for Saving A.I.G., by A.I.G.”
Los Angeles Times: “Keeping AIG going”
Legal Week: “US trio take lead on latest AIG bailout”
Associated Press: “Bernanke: Recovery hinges on financial turnaround”
ABAJournal.com: “Ex-CEO Hank Greenberg Sues AIG, Says He Overpaid for Stock”
Updated at 2:57 p.m. to include link to subsequent ABAJournal.com post.
