US Rep Frank Wants Investigation Of AIG Counterparties

The lead U.S. House Democrat on financial issues called Wednesday for an investigation into whether U.S-based financial institutions who were counterparties to American International Group Inc. (AIG) received disparate treatment compared to their foreign-owned rivals.

House Financial Services Chairman Barney Frank, D-Mass., asked top officials at the Federal Reserve and Treasury Department to look into the issue, which has been raised by the panel's leading Republican, Rep. Spencer Bachus of Alabama.

"I do not know what basis there is for the point he makes, but it is a serious issue and must be addressed," Frank said in a letter to Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner.

Bachus said in recent letter to Frank that he has received information suggesting that AIG is trying to "force many of its creditors that are U.S. banks to accept severe reductions in the debt owed to them." Bachus said in the March 26 letter.

Frank wrote to Bernanke and Geithner that any sort of different treatment for foreign counterparties "does not seem to me to have any basis whatsoever in the law, in policy, and certainly not in the need for a public acceptance of your actions.

-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273; [e-mail]