The easiest way to tell this story is to post the text of a letter I sent to my Senators and Congressman yesterday. Here it is:
"March 19, 2009
Sen. Christopher Dodd, Sen. Joseph I. Lieberman, Hon. John B. Larson
Re: Duplicate Payments to AIG Counterparties?
I noticed that several prominent financial services firms that received TARP funds last year also appear on the recently-released list of counterparties to be paid by AIG from bailout funds.
These firms include AIG International, Bank of America/Merrill Lynch, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Wells Fargo/Wachovia, and possibly others. The total of counterparty payments due to these firms from AIG appears to be at least $30,900,000,000.
This presents the possibility that some of these firms could have applied for and received TARP funds last fall, in anticipation of defaults by AIG; and are now in line to receive payment by AIG. Thus, they stand to be paid twice, with the money for both payments coming from taxpayers.
This possibility raises three questions:
1. What controls, if any, are in place to guard against this kind of double-dipping?
2. If no controls are in place, what steps will be taken to forestall the possibility of such duplicate payments and who will take them?
3. If duplicate payments have already been made, what steps will be taken to recover the money and who will take them?
In the ideal world, companies receiving duplicate payments to the same account would return the money on their own. But, as recent experience has amply shown, these firms cannot be trusted to "do the right thing" under almost any circumstances. This would certainly be one of them.
Could you gentlemen please look into this matter and let the public know the extent of any such double-dipping? If, as I suspect, double-dipping is found, what steps are being taken to protect taxpayer interests?
Very truly yours,
Timothy F. Geithner
Secretary of the Treasury