TARP inspector says New York Fed mishandled AIG bailout

11/17/2009 | NYTimes.com

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, wrote in a report that the Federal Reserve Bank of New York "refused to use its considerable leverage" in handling the bailout of American International Group. The Fed should have negotiated with AIG's trading partners instead of agreeing to pay them 100 cents on the dollar, the report said. The report says that a series of mistakes were made in the negotiations leading up to the decision to pay trading partners in full.

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