Banksters

Heckuva job, Timmeh.

Nov. 16 (Bloomberg) -- The Federal Reserve Bank of New York “severely limited” its ability to save taxpayer money on American International Group Inc.’s rescue by refusing to compel banks to take concessions, said a Treasury Department watchdog.

The Fed didn’t use its “considerable leverage” as regulator of several of AIG’s counterparties to force them to accept so-called haircuts on credit-default swaps, Neil Barofsky, special inspector for the Troubled Asset Relief Program, said today in a report. The regulator gave up efforts to negotiate discounts from the banks after two days and opted to pay them in full for $62.1 billion in swaps, Barofsky said.

“These policy decisions came with a cost -- they led directly to a negotiating strategy with the counterparties that even then-New York Fed President Geithner acknowledged had little likelihood of success,” Barofsky said.