Dec 3 (Reuters) - U.S. Senator Chuck Grassley has asked the Treasury Secretary and Federal Reserve Bank of New York Chief to explain how taxpayers get a better deal from holding American International Group Inc equity instead of debt.
In a letter issued in a press statement on Wednesday and sent to both Treasury Secretary Timothy Geithner and New York Fed Chief Executive William Dudley on Tuesday, the Iowa Senator said, 'exchanging debt for equity still leaves taxpayer dollars at substantial risk'.
Bailed-out insurer AIG said on Tuesday that it had closed a pact with the New York Federal Reserve, slashing its debt under a credit facility by more than half, to $17 billion.
The debt reduction is due to a deal announced last March to give the New York Fed a preferred stake in two of AIG's biggest life insurance units, American Life Insurance Co (Alico) and American International Assurance (AIA), effectively swapping debt for equity.
In the letter released on Wednesday Grassley said 'billions of dollars in taxpayer money is in jeopardy due to actions by the Treasury and the New York Fed'.
Grassley also said in the letter that AIG recently failed to make dividend payments which gave the Treasury rights to name at least two members to its board, and asked about the status of the Treasury's efforts to find candidates.
(Reporting by Deepti Govind in Bangalore) Keywords: AIG/ (deepti.govind@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: deepti.govind.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
In a letter issued in a press statement on Wednesday and sent to both Treasury Secretary Timothy Geithner and New York Fed Chief Executive William Dudley on Tuesday, the Iowa Senator said, 'exchanging debt for equity still leaves taxpayer dollars at substantial risk'.
Bailed-out insurer AIG said on Tuesday that it had closed a pact with the New York Federal Reserve, slashing its debt under a credit facility by more than half, to $17 billion.
The debt reduction is due to a deal announced last March to give the New York Fed a preferred stake in two of AIG's biggest life insurance units, American Life Insurance Co (Alico) and American International Assurance (AIA), effectively swapping debt for equity.
In the letter released on Wednesday Grassley said 'billions of dollars in taxpayer money is in jeopardy due to actions by the Treasury and the New York Fed'.
Grassley also said in the letter that AIG recently failed to make dividend payments which gave the Treasury rights to name at least two members to its board, and asked about the status of the Treasury's efforts to find candidates.
(Reporting by Deepti Govind in Bangalore) Keywords: AIG/ (deepti.govind@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: deepti.govind.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2009 AFX News
