11/17/2009

An audit conducted by Neil Barofsky, special inspector general for the U.S. government's Troubled Asset Relief Program, criticizes negotiations between the Federal Reserve Bank of New York and counterparties of American International Group. The audit says the New York Fed should have used its leverage as supervisor of some of the trading partners to persuade them to accept reduced prices on AIG contracts. The Fed defended its actions, saying its intervention "was designed to prevent a systemwide collapse and achieved that end."

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