WASHINGTON: Officials managing the multibillion dollar bailout of insurance giant American International Group Inc. bungled the first rescue and may have overpaid other banks to wind down AIG's business relationships, a government watchdog says.
The Federal Reserve Bank of New York - headed at the time by now Treasury Secretary Timothy Geithner - paid AIG's business partners face value for securities so they would cancel insurance-like contracts AIG had written and ease the firm's liquidity crunch.
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