NU Online News Service, May 11, 1:13 p.m. EDT
A letter from a congressional committee probing American International Group's use of taxpayers' bailout money reveals that a still-secret company restructuring plan has quietly involved U.S. banking officials.
"The committee was unaware that the Federal Reserve Bank of New York was so heavily involved in the management of AIG," wrote Rep. Edolphus Towns, D-N.Y., who chairs the Committee on Oversight and Government Reform, in a May 7 letter to AIG's chairman and chief executive officer, Edward Liddy.
His letter asked that AIG deliver by 4 p.m. today the details of a company "multi-year roadmap" and restructuring plans confidentially labeled Project Destiny.
Rep. Towns informed Mr. Liddy that he found it interesting that "Project Destiny enjoyed…'the full participation of the staff of the Federal Reserve Bank of New York and its advisors on the Project Destiny teams.'"
In addition to Rep. Towns' letter, the committee released an "INTERNAL USE ONLY" document written by AIG Chief Restructuring Officer Paula Reynolds, detailing how since March 2 "nine teams have worked to assess all of the options available to maintain and enhance the vitality of their businesses, thereby creating the most value to satisfy our obligations to the U.S. taxpayers over time."
Her April 23 communications to her colleagues said specifics would be revealed over coming weeks, but they could not immediately be made public until steps such as "reviewing international securities laws on disclosures and reviewing the plan with the U.S. Treasury" are taken
One part she did make public was the acceleration of the separation of "AIU Holdings as an independent entity by transferring the company to a special purpose vehicle." In addition to the separation, AIU is pondering a name change.
Ms. Reynolds wrote that "we were also appreciative of the full participation of the staff of the Federal Reserve Bank of New York and its advisors on the Project Destiny teams."
In advance of its hearing, Rep. Towns asked for copies of the nine Project Destiny teams' business plans, the "multi-year roadmap" for AIG restructuring, and a list of the Federal Reserve Bank of New York employees and "advisors" who participated in Project Destiny and details about their roles.
Ms. Reynolds' message said that the roadmap "will give us a sense of direction and will lay out the specific steps and timetables for our progress."
"In doing so," she added, "it will build credibility with our business partners, our customers and the public. Second, the roadmap will show that it is possible for us to make meaningful and systematic progress in reducing our indebtedness to the American taxpayer. Third, we can restore hope and forward momentum to our organizations."
She concluded that "simply put, we are going to get our groove back."
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