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Former New York State Insurance Commissioner Eric Dinallo has taken to the pages of the Wall Street Journal to dispel criticisms that Treasury Secretary Tim Geithner misrepresented himself during his testimony on the AIG rescue that both men participated in during the 2008 crisis.
Mr. Geithner does not contradict [my testimony]. What he does say is that a bankruptcy of the parent company would have caused problems for the insurance companies, policyholders, and the insurance market as a whole.I agree. If AIG had gone bankrupt, state regulators would have seized the individual insurance companies. The reserves of those insurance companies would have been set aside to pay policyholders and thereby protected from AIG's creditors. However, as Mr. Geithner correctly points out, AIG's insurance companies were intertwined with each other and the parent company. Policyholders would have been paid, but only after a potentially protracted delay.The whole thing is, as they say, worth reading.Dinallo had more power than your average state insurance commissioner simply because of his jurisdiction -- many major insurance companies are headquartered in New York and played a large role settling the AIG debacle. He also brokered a major settlement with the multiple international firms that insured the World Trade Center in the wake of 9/11, and was one of Elliott Spitzer's top attorneys going after Wall Street. Now Dinallo is seeking Spitzer's old job and has thrown his hat into the New York State attorney general's race. I have no idea whether he's got a chance of being elected -- New York readers? -- but he certainly has a very strong body of experience for the job.
-- Tim Fernholz
