Bailout Mystery: Did Paulson Ignore a CIC Bid to Rescue AIG?

November 27, 2014 by Loch Adamson

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What if the U.S. government bailout of American International Group — the biggest ever — wasn’t necessary? And what if China Investment Corp. (CIC), the big sovereign wealth fund of America’s greatest geopolitical rival, had stepped in to rescue it instead? Those are two questions arising from a lawsuit in which former Treasury secretary Henry (Hank) Paulson Jr. testified last month about the events of September 2008, the vortex of the credit crisis that brought the global financial system to its knees. An intriguing yarn can be stitched together via a court document, the Plaintiffs’ Corrected Proposed Findings of Fact, and the ex–Treasury secretary’s own foggy recollections. It turns out that one alternative to a taxpayer-backed rescue was available — and rebuffed. CIC, an investment arm of the People’s Republic of China, approached the Department of the Treasury directly and expressed interest in investing in giant insurance conglomerate…

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