In testimony before a Congressional Oversight panel late last week, Secretary of the Treasury, Timothy Geithner, stated that the Government Accounting Office is predicting a $30.4 billion loss from the government’s investment in American International Group. A similar loss is expected for the government’s bailout of the automobile industry.
Geithner received criticism from Republicans for extending the TARP fund into next year, when the remaining money could be used to reduce the massive deficit the government has recorded this year to help save the financial system from collapse. There have been calls for Geithner’s resignation for his handling of the AIG matter while he was in charge of the Federal Reserve Bank of New York.
The $30.4 billion projected loss conflicts with earlier reports from credit rating firms that stated it was likely that AIG would be able to repay it’s liabilities to the government. Still the government appears to be willing to go along with AIG slower pace in spinning off assets in order to receive better prices which may serve to reduce that projected loss even further.
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