The Securities and Exchange Commission exists to enforce trading laws and ensure as much transparency as possible on Wall Street.  The bailout of AIG made American taxpayers the majority stockholder in the insurance giant, with hundreds of billions of dollars flowing from Treasury to AIG, and then to … whom?  Thanks to a strange decision by the SEC, we won’t know the details for another eight years:

It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group (AIG.N) because of an action taken last year by the Securities and Exchange Commission.

In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs (GS.N), Deutsche Bank (DBKGn.DE) and Merrill Lynch.

The SEC’s Division of Corporation Finance, in granting AIG’s request for confidential treatment, said the “excluded information” will not be made public until Nov. 25, 2018, according to a copy of the agency’s May 22 order.

The SEC said the insurer had demonstrated the information in the exhibit, called Schedule A, “qualifies as confidential commercial or financial information.”

This follows on last week’s revelation by Bloomberg that current Treasury Secretary Tim Geithner, at the time the chair of the New York Fed, instructed AIG to keep that information from the SEC itself:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year.

This administration came to power on a promise of more transparency and open government.  At the moment, we have a tax evader running Treasury who instructed AIG to keep its mouth shut in his previous job, and now apparently has the SEC continuing the same tactic.  Meanwhile, American taxpayers have poured over $150 billion into AIG, supposedly to rescue it, only to find out that Geithner used AIG as a slush fund to capitalize other financial institutions.

Who chose the winners and the losers?  We don’t know.  The SEC won’t let us see the records.

How were these institutions chosen?  We don’t know.  The SEC won’t let us see the records.

What were the political connections between the winners and people like Geithner, Hank Paulson, and members of the Bush and Obama administrations?  We don’t know.  The SEC won’t let us see the records.

AIG only exists because of taxpayer funds.  Its records should be as transparent as possible.  Instead, the SEC has allowed them to make a special case for secrecy in the distribution of taxpayer dollars in a shady enterprise that looks as if it circumvented Congress in interventions.  If we had a Congress instead of a supine rubber stamp for the Obama administration, they might show some interest in investigating the SEC, AIG, Geithner, and everyone connected to this.