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But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs -- one of Wall Street's most politically connected firms -- and to European banks including Deutsche Bank, France's Societe Generale and the UK's Barclays could stoke further outrage at the entire U.S. bank bailout.
FINANCIAL SYSTEM AT STAKE?
The fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary.
"It doesn't to me seem fair that the American taxpayer has got to bear the 100 percent of the downside," said Campbell Harvey, a finance professor at Duke University.
"A hedge is not a hedge if you did not factor in the counterparty risk. And the U.S. taxpayer should not be obligated to make people whole for hedges that were not properly executed."
As more Americans lose their jobs and homes, Obama's new administration is under heavy pressure to show that the rescue plan for AIG and major banks is working to free up lending and rein in the riskier excesses of Wall Street.
Originally posted by marg6043
David, when Bush said during the first bail out that America will take care of our friends abroad, he wasn't joking
While the news that AIG bailout money went to foreign banks could further stoke political outrage, some experts said the alternative could have been worse.
"The nationality of the bank should not matter," said Peter Morici, professor at the Smith School of Business, University of Maryland. "We have an inter-related financial system. You do something to mess with that and all bets are off the table."