The top Republican on the House Financial Services Committee is demanding data on banks he suspects are being asked to take significant haircuts on loans they extended to subsidiaries of American International Group Inc., now majority-owned by the government.
"While foreign and domestic counterparties were made whole, AIG has been attempting to force many of its creditors that are U.S. banks to accept severe reductions in the debt owed to them," Rep. Spencer Bachus, R-Ala., wrote in a letter this week to Treasury Secretary Timothy Geithner.
At least 17 banks are being asked to accept less than what is owed to them, Bachus said in an interview, citing information he has received. "It's tremendously unfair," he said. "What is it about a [credit-default swap] that makes it any more sacred? The credit-default swaps were a bet, … gamble … a risk."
In an earlier letter to Geithner, Bachus said one subsidiary, AIG Baker, was demanding a 72% reduction in principal on a $45 million syndicated loan made by three unnamed U.S. banks. AIG Baker is an Alabama-based shopping center developer with a presence in about 20 states.
The Treasury declined to comment.