Senator Warner said today he is “irked” that taxpayer dollars will be used to bail out undisclosed investment partners who made risky gambles with AIG, which will receive a fourth bailout from the government.
During today’s Budget Committee hearing with Federal Reserve Chairman Ben Bernanke, Senator Warner suggested that these investors, called “counterparties,” should take a “haircut” loss on their investments as a consequence of their “lack of appropriate due diligence or responsible behavior” in entering into the risky deals with AIG’s credit default swaps.
Here is what Senator Warner told Chairman Bernanke:
It just irks me a bit that we, the American taxpayers, are still basically asked to continue to totally bail out all these counterparties when … there ought to be some haircut taken by these folks at some point in this process. …
Folks who bought these instruments and, at some point in their process, should have been doing some level of credit analysis of what AIG was selling … are going to still come out whole [despite] their lack of appropriate due diligence or responsible behavior.
Chairman Bernanke agreed:
I’m as unhappy as you are about that, Senator. I just don’t know what to do about it.
Senator Warner agreed with Senator Ron Wyden of Oregon that at a minimum the government ought to disclose who exactly these counterparties are and who will receive the bailout money given to AIG.