WASHINGTON — A watchdog panel on Thursday blasted the government’s $182 billion bailout of insurance giant American International Group Inc. for its continued “poisonous effect” on financial markets and said it’s still unclear whether taxpayers ever will be fully repaid.
The Congressional Oversight Panel, set up by lawmakers to monitor the $700 billion bailout fund, also was sharply critical of Treasury and Federal Reserve officials for failing to exhaust all options in 2008 before rescuing AIG as it teetered near bankruptcy.
Taxpayers are still on the hook for $132.3 billion in the bailout, and the Congressional Budget Office’s latest estimate is for a $36 billion loss.
At a hearing by the panel last month, AIG executives and federal officials expressed optimism that taxpayers would get most, if not all, of their money back. Fed Chairman Ben Bernanke reiterated that point at a congressional hearing Wednesday, saying, “AIG, I believe, will repay.”
But in its 328-page report on the AIG bailout Thursday, the oversight panel wasn’t nearly as optimistic.
“For now, the ultimate cost or profit to taxpayers is unknowable, but it is clear that taxpayers remain at risk for severe losses,” the report said.
The panel was highly critical of the decision to bail out AIG. The report noted that federal officials in the past “had placed a high priority on avoiding direct taxpayer liability for the rescue of private businesses.”
