IN LETTER TO BERNANKE JEC CHAIR MALONEY RENEWS REQUEST FOR AIG TRANSPARENCY

Washington, D.C. – Today Congresswoman Carolyn B. Maloney, Chair of the Joint Economic Committee, sent the following letter to Federal Reserve Chairman Ben Bernanke.  Chair Maloney is renewing her request for information pertaining to the Federal Reserve’s purchase of collateralized debt obligations and residential mortgage backed securities from AIG.  

The letter, as sent to Chairman Bernanke, is below.  The letter from noted economist and Nobel laureate Joseph Stiglitz, referenced below, is attached.

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BY ELECTRONIC MAIL AND MAIL DELIVERY

March 4, 2009

Hon. Ben Bernanke
Chairman
Board of Governors of the Federal Reserve

Dear Chairman Bernanke:

As you may recall, late last year, when you were testifying before the House Financial Services Committee, you agreed, in response to my request, to provide me and the Committee with information about the counterparty transactions in which the Federal Reserve (or entities set up and funded by the Federal Reserve) purchased from certain counterparties multi-sector collateralized debt obligations (CDOs) on which AIG had written credit default swap (CDS) contracts.  In connection with the purchase of these CDOs, counterparties unwound related CDS transactions.  Also, the Federal Reserve funded the purchase of residential mortgage backed securities (RMBS) from AIG.  I requested information on the identities of the counterparties from whom the CDOs and CDS were purchased, the price paid by the Fed for the CDOs, CDS and RMBS, and a description of how the prices were determined.

However, to date, your office has not provided that information to me nor, as far as I am aware, to the Financial Services Committee.  This letter is to reiterate that request and to ask that the information be provided to me at the Joint Economic Committee and to the Financial Services Committee as soon as possible. As the New York Times editorial said on March 3, 2009 about these very transactions: “The AIG bailouts fail the basic test of transparency: Who ends up with the money?”  I agree with the Times that “not knowing is not acceptable.”

In further support of my request, I attach a letter from a fellow New Yorker, the noted economist and Nobel laureate Joseph Stiglitz, separately requesting release of this information on his own behalf and explaining how the Fed’s providing this information is essential to informed debate over, and efficient development of solutions to, our current economic crisis, as well as to Congress’ ability to oversee the use of taxpayers’ money with respect to the AIG bailout or similar efforts.   This is the letter I put into the record at the Financial Services hearing at which you testified on February 25, 2009.
           
Thank you very much for your prompt response to this request.

                                                Sincerely,

                                                Carolyn B. Maloney
                                                Chair, Joint Economic Committee
Enclosure