The Stash

Another Aig Scandal?

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Oy, I got this press release today from the House Oversight and Government Reform Committee, which has jurisdiction over the AIG bailout:

U.S. Representative Edolphus “Ed” Towns (D-NY), the Chairman of the Committee on Oversight and Government Reform, is demanding information from American International Group (AIG) about the company’s retention of outside public relations firms to help determine whether federal bailout dollars were used to pay public relations firms to attack critics of AIG and the Federal bailout. 

Chairman Towns today wrote current AIG Chairman and CEO Edward M. Liddy about this issue after hearing allegations that AIG may have contacted the news media and others to attack the credibility of former AIG Chairman and CEO Maurice Greenberg on the eve of Mr. Greenberg testifying before the Committee during its April 2, 2009 hearing on the collapse and Federal rescue of AIG. 

The letter states, “I would be extremely disappointed to learn that any of the billions of taxpayer dollars invested to support AIG may have been diverted to finance a public relations campaign against critics of the AIG bailout. In my view, these allegations warrant further inquiry to ensure that Federal funds are not being misused.”

On the one hand, if true, it does seem galling that AIG would use taxpayer money to fund a PR campaign against its critics--many of whom are in Congress and could in principle cut off the money. (Though there's no suggestion that the PR campaign targeted members of Congress directly.) On the other hand, it's hard to begrudge a company tending to its image.

It kind of distills the whole problem with government ownership/control: A lot of the things large private enterprises do are crass and distasteful. But they're, you know, what large private enterprises do. And if you prevent them from doing these things, you put them at a competitive disadvantage relative to their rivals.

Update: TPMMuckraker has more here.

--Noam Scheiber

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