TARP Panel: Effects Of AIG Rescue “Poisonous”

The American International Group Inc. bailout may have redefined the relationship between the federal government and the most sophisticated financial institutions, a watchdog agency warns.

The efforts of the Federal Reserve Bank of New York and the U.S. Treasury Department to rescue AIG, New York (NYSE:AIG), in late 2008 “distorted the marketplace by transforming highly risky derivatives bets into fully guaranteed payment obligations,” the Troubled Asset Relief Program Congressional Oversight Panel says in a new report on AIG.

Read more...