Biz Brief: Congressional Watchdog Criticizes AIG Bailout

A government watchdog group Thursday criticized efforts by the New York Federal Reserve under the leadership of Timothy Geithner for failing to exhaust all options to arrange a private-sector rescue of American International Group (AIG) before launching a taxpayer-funded bailout in 2008.

A report by the Congressional Oversight Panel said Geithner, now U.S. Treasury Secretary, on Sept. 15, 2008 left the task of finding a private bailout for AIG to just two Wall Street banks, JPMorgan Chase (JPM) and Goldman Sachs Group (GS), which had "severe conflicts of interest as they would have been among the largest beneficiaries of a taxpayer bailout," the report said. "By failing to bring in other players, the government neglected to use all of its negotiating leverage."