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AIG Questioned on Billions in Bank Payouts

HeadlineMar 27, 2009

The insurance giant AIG is facing new congressional and legal scrutiny over how it funneled tens of billions of dollars in taxpayer bailout money to banks facing huge losses that AIG had insured. In what some have called the “backdoor bailout,” AIG gave nearly $13 billion to Goldman Sachs and tens of billions more to other firms, including Bank of America, Merrill Lynch, JPMorgan Chase, Morgan Stanley and several foreign banks. On Thursday, twenty-six House Democrats signed a letter by Congress member Elijah Cummings asking the bailout program’s inspector general to investigate the payments. Meanwhile, New York State Attorney General Andrew Cuomo subpoenaed AIG for information related to the derivatives payments funneled to the banks.

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