Probe into NY Fed over AIG disclosure

The New York Federal Reserve is being investigated by Neil Barofsky, the special inspector general overseeing the troubled assets relief programme, over its disclosure of documents relating to the bail-out of AIG and its counterparties.

In a statement submitted to the House oversight committee, Mr Barofsky said his team is examining whether the New York Fed improperly withheld information about the AIG bail-out from the Securities and Exchange Commission and his office.

Separately, congressional investigators were on Monday finishing their review of thousands of e-mails and other documents prior to an appearance on Capitol Hill on Wednesday by Tim Geithner, Treasury secretary and former New York Fed president.

E-mails between New York Fed officials, some of which have been obtained by the Financial Times, show the institution trying to keep private details of the $27.1bn in payments to AIG counterparties, arguing that specifics did not have to be disclosed to the SEC.

“They conspire about how they can disclose less so that they can have less questions,” said Darrell Issa, the senior Republican on the committee, who has spearheaded the congressional investigation. “One can say, well, who was harmed? Any time you don’t want the public to see you have to assume that what was harmed was a potential better decision.”

The New York Fed said it “has and will continue to co-operate fully” with Mr Barofsky’s office. The Treasury declined to comment.

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