Barosky's Report on AIG's Bailout and the NY Fed's Questionable Actions

1) The original terms of federal assistance to AIG, including the high interest rate it adopted from the private bank's initial term sheet, inadequately addressed AIG's long-term liquidity concerns, thus requiring further government support. 2) The New York Fed's negotiating strategy to pursure concessions from counterparties offered little opportunity for success.
3) The structure and effect of the New York Fed's assistance to AIG ... effectively transferred tens of billions of dollars of cash from the government to AIG's counterparties, even though senior policy makers content that assistance to AIG's counterparties was not a relevant consideration in fashioning the assistance to AIG.

4) ... It is difficult to assess the true costs of the Federal Reserve's actions until there is more clarity as to AIG's ability to repay all of its assistance from the government.