Barofksy: FYI, French Would've Negotiated With AIG

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SIGTARP Neil Barofsky- who is testifying later today- is adding oil to the AIG fire, saying in prepared remarks that French regulators were actually willing to negotiate AIG's obligations after all. The claim further undercuts the argument the Fed has been using all along, namely that they didn't push domestic counterparties to take haircuts as foreign regulators were unwilling and/or legally barred from taking discounts.

"What FRBNY officials recounted was the reaction of the French bank regulator which, according to FRBNY, refused to allow two French bank counterparties to make concessions."
SIGTARP was informed that the French regulator was in fact open to further negotiations with the Federal Reserve to discuss the possibility of such concessions. While they viewed the transactions proposed by the Federal Reserve as being violative of French law, the regulators informed SIGTARP that they believed that an exception was possible and that they were willing to further discuss potential concessions. The French regulators noted that such negotiations would have been unprecedented, would have likely required universal agreement among counterparties to make concessions, and would have had to be conducted in a transparent manner and at a high level, but that continued negotiations were possible. They did inform SIGTARP that they did not "slam the door" to such continued discussions.

Barofsky Remarks [scribd]

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