By seeking more information from foreign governments, the U.S. could have borne less of the financial risks related to the rescue of the American International Group, a watchdog report said Thursday.
"If the U.S. government had gathered more information about which countries' institutions would most benefit from some of its actions, it might have been able to ask those countries to share the pain of rescue," the Congressional Oversight Panel wrote in its latest report.
Banks in Germany and France were among those who benefited the most from taxpayers' bailout of AIG while the U.S. bore the brunt of the bailout's risks alone.
Nearly half of the entities that indirectly benefited from a U.S. purchase of billions in collateralized debt obligations related to AIG and still on the U.S. Federal Reserve's balance sheet are based abroad, data assembled by the panel showed.
"This report shows that Treasury worked effectively with its overseas partners in a number of ways to address the global financial crisis," Treasury said in a statement.
Foreign hedge providers received 43.4% of taxpayer funds used to fund a facility dubbed Maiden Lane III, which bought the CDOs from AIG, the panel said.
"Taxpayer aid to AIG became aid to Goldman, and aid to Goldman became aid to a number of domestic and foreign investors," the panel wrote.
The panel noted that the U.S. has seen far more limited gains as a result of foreign countries' financial sector rescues.
"America's rescue had a much greater impact on other nations than their rescue programs had on the United States," Elizabeth Warren, who chairs the panel, said in a conference call.
Warren declined to answer questions related to her candidacy to head a new Consumer Financial Protection Bureau created by the financial sector regulatory reform bill.
This story has been reprinted with permission from American Banker.
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