Working the AIG Beat

The Journal’s good scoop this weekend on the AIG counterparties is somewhat furthered today by Fortune’s Carol Loomis. And now it seems we’re finally getting somewhere.

Why does this matter so much? AIG, of course, was effectively nationalized in September as it was about to fail. AIG had issued hundreds of billions of dollars of credit-default swaps, which are insurance against defaults. The Federal Reserve’s multiple bailouts of AIG have just used it as a conduit to funnel money to its Wall Street and foreign customers, whose identifies remain an official government secret. Reporting by Gretchen Morgensonin the Times and Mark Pittman at Bloomberg News has pried loose a few names, including the likes of Goldman Sachs and JPMorgan Chase. We call all this a “backdoor bailout.”

What makes this extra scandalicious is that the government continues to stonewall on who’s getting our money and how much. Congress recently stirred itself long enough to bark out some complaints, six months after the fact. Now, finally, some leaks.

The Journal on Saturday scooped that the counterparties have gotten $50 billion in taxpayer funds, including $6 billion for Goldman Sachs (oddly the paper did not indicate whether it asked Goldman, which had denied any “material” exposure to AIG, for comment) and $6 billion for Deutsche Bank. It lists fifteen banks that have gotten AIG funds.

Fortune has a similar list of fifteen banks, with some differences. It’s not clear why there are discrepancies between its list and the WSJ’s, though Loomis does report that there are “25 counterparties involved.”

It appears the press along with helpful leakers are about, finally, to force the Fed’s hand. Stay tuned on this one.

UPDATE: ABC News gets a leak of its own. It has the report AIG wrote for the Treasury Department on what would happen if it didn’t get another bailout. Basically, financial Armageddon, AIG said.

(h/t Ritholtz)

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.