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Paulson, ex-Fed official added to AIG probe

Associated Press / January 16, 2010

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WASHINGTON - A House committee is broadening its probe of secretive bank bailouts to include former Treasury Secretary Henry Paulson and former Federal Reserve Bank of New York chairman Stephen Friedman.

The Committee on Oversight and Government Reform has invited Paulson and Friedman to testify about their roles in the bailout of American International Group, according to committee chairman Edolphus Towns, Democrat of New York.

Lawmakers want to know more about deals that funneled billions from AIG to banks including Goldman Sachs Group Inc. Friedman is a Goldman director and resigned from the New York Fed after concerns he had conflicts of interest.

An earlier report said the bailouts might have cost taxpayers billions more than necessary because officials did not demand concessions from the banks.

The bailouts were managed by the New York Fed under the leadership of Treasury Secretary Timothy Geithner. Geithner has defended the deals.