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Notes to Chapter 20 625

132. Office of the Special Inspector General for the Troubled Asset Relief Program, “Quarterly Report
to Congress,” October 26, 2010, table 2.1, p. 46 (obligation figures as of October 3, 2010, and expenditure
figures as of September 30, 2010).
133. The money market funding is through the Asset-backed Commercial Paper Money Market Mu-
tual Fund Liquidity Facility (AMLF); FCIC staff calculations.
134. Board of Governors of the Federal Reserve System, “Regulatory Reform: Agency Mortgage-
backed Securities (MBS) Purchase Program.”
135. The Fed had created the first Maiden Lane vehicle in March to take $29 billion in assets off the
balance sheet of Bear Stearns, as described in chapter 15. See “AIG RMBS LLC Facility: Terms and Con-
ditions,” December 16, 2008; “AIG Discloses Counterparties to CDS, GIA and Securities Lending Trans-
actions,” AIG press release, March 15, 2009, Attachment D: Payments to AIG Securities Lending
Counterparties.
136. Federal Reserve Bank of New York, “Maiden Lane III: Transaction Overview”; Federal Reserve
and Treasury Department press release, November 10, 2008; “AIG CDO LLC Facility: Terms and Condi-
tions,” Federal Reserve Bank of New York press release, December 3, 2008; FRBNY, “Maiden Lane Trans-
actions.” $27.1 billion was paid to 16 counterparties and $2.5 billion was paid to AIGFP as an adjustment
to reflect overcollateralization.
137. Office of the Special Inspector General for the Troubled Asset Relief Program, “Factors Affecting
Efforts to Limit Payments to AIG Counterparties,” SIGTARP-10-003, November 17, 2009, pp. 19–20.
138. Blankfein, testimony before the FCIC, January 13, 2010, transcript, pp. 90–93.
139. Data provided to Goldman Sachs to the FCIC.
140. David Viniar, testimony before the FCIC, Hearing on the Role of Derivatives in the Financial
Crisis, day 2, session 1: American International Group, Inc. and Goldman Sachs Group, Inc., July 1, 2010,
transcript, p. 148.
141. Goldman Sachs, email to FCIC, July 15, 2010.
142. Ibid.; and data provided by Goldman Sachs to the FCIC.
143. SIGTARP, “Factors Affecting Efforts to Limit Payments to AIG Counterparties,” pp. 15–16, 18.
The report said counterparties insisted on 100% coverage because (1) concessions “would mean giving
away value and voluntarily taking a loss, in contravention of their fiduciary duty to their shareholders”;
(2) they had a “reasonable expectation” that AIG would not default on further obligations, given the gov-
ernment assistance; (3) costs already incurred to protect against a possible AIG default “would be exacer-
bated if they were paid less than par value”; and (4) they were “contractually entitled” to receive the par
value of the credit default swap contracts.
144. “In other words, the decision to acquire a controlling interest in one of the world’s most complex
and most troubled corporations was done with almost no independent consideration of the terms of the
transaction or the impact that those terms might have on the future of AIG” (ibid., p. 28).
145. Ibid., summary, p. 1.
146. Congressional Oversight Panel, “June Oversight Report: The AIG Rescue, Its Impact on Markets,
and the Government’s Exit Strategy,” June 10, 2010, pp. 10, 8.
147. Suzanne Kapner, “US Congressional Panel Attacks AIG Rescue,” Financial Times, June 10, 2010.
148. Baxter, interview.
149. Sarah Dahlgren, interview by FCIC, April 30, 2008.
150. SIGTARP, “Factors Affecting Efforts to Limit Payments to AIG Counterparties,” p. 29.
151. Timothy Geithner, quoted in Jody Shenn, Bob Ivry, and Alan Katz, “AIG 100-Cents Fed Deal
Driven by France Belied by French Banks,” Bloomberg Businessweek, January 20, 2010.
152. E.g., Baxter, interview; Jim Mahoney, Federal Reserve Bank of New York, interview by FCIC,
April 30, 2010; Michael Alix, Federal Reserve Bank of New York, interview by FCIC, April 30, 2010.
153. Dahlgren, interview.
154. Baxter, interview.
155. GAO, “Federal Financial Assistance: Preliminary Observations on Assistance Provided AIG,”
GAO-09–4907 (Testimony: Before the Subcommittee on Capital Markets, Insurance, and Government
Sponsored Enterprises, House Committee on Financial Services), March 18, 2009, p. 2; Federal Reserve
press release, September 16, 2008.
156. AIG, “What AIG Owes the US Government,” updated September 30, 2010.