Grassley: GAO’s Report on AIG Shows Perils of “Too Big to Fail” Argument

Sen. Chuck Grassley, ranking member of the Committee on Finance, today made the following comment on a report from the Government Accountability Office, “Troubled Asset Relief Program: Status of Government Assistance Provided to AIG,” GAO-09-975, September 21, located at http://www.gao.gov/cgi-bin/getrpt?GAO-09-975.

“A massive government bailout was supposed to save AIG, but at what cost to taxpayers? One year after federal intervention, GAO warns AIG might never be able to repay the $120.7 billion it owes the government. I hope the officials at Treasury and the Federal Reserve who pushed the too-big-to-fail argument will learn from this experience if AIG pays back pennies on the dollar in the end. It’s also noteworthy that the credit rating agencies view AIG’s financial condition more positively as Treasury is more exposed to a potential failure of AIG to repay the billions of dollars advanced. The credit rating system rewards the wrong outcomes.”

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