The U.S. government has committed $180 billion to help the world's largest insurance company - American International Group, or AIG - avoid bankruptcy. Government regulators testifying before the Senate Banking Committee on Thursday were asked to explain who is benefiting from the bailout.
Lawmakers say they are not getting the answers they want from regulators who were asked to explain who is benefiting from the government's $180 billion bailout of AIG.
Senate Banking Committee Chairman, Democrat Christopher Dodd of Connecticut:
"This committee would like to know, and the taxpayers certainly have a right to know, who they are effectively funding and how much they have already been given," said Christopher Dodd.
AIG recently announced that it suffered a $60 billion loss during the last three months of 2008 - the worst corporate quarterly loss in U.S. history.
Most of AIG's losses came from its business of insuring securities linked to mortgages and other loans that ended up losing value.
Now lawmakers want government regulators to explain which customers have been helped by AIG's federal bailout.
But regulators from the Federal Reserve - the U.S. central bank, which has been providing the funds - are reluctant to release the names of AIG's customers.
This is Federal Reserve Vice Chairman, Donald Kohn:
"My judgment would be that giving the names would undermine the stability of the company and could have serious knock-on effects to the rest of the financial markets and the governments efforts," said Donald Kohn.
Kohn argues that releasing the names of the companies might discourage them from doing business with AIG.
The federal government has stepped in four times to help AIG and has taken an 80 percent stake in the company.
The Ranking Republican on the Senate Banking Committee, Richard Shelby of Alabama, says if the central bank want to continue bailing out AIG, lawmakers need more information.
"You're going to keep asking for more money and more money and more money," said Richard Shelby. "And the people want to know what you've done with this money."
AIG and other insurance companies play a crucial role in the healthy functioning of the banking industry. Because of its business interests around the world, analysts say the collapse of AIG would negatively affect the international banking system.
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