The US bailout of financial institutions, and in particular AIG, wound up rescuing foreign firms, according to a new report from the Congressional Oversight Panel.  Similar efforts in other countries didn’t exactly reciprocate our generosity; other nations tailored their bailouts to keep the benefits within their own economies.  The report should raise more questions about the nature of the AIG bailout and the intentions of its authors:

The federal government’s effort to stabilize the financial system in 2008 by flooding money into as many banks as possible resulted in a boon to many foreign firms and left the United States shouldering far more risk than governments that took a narrower approach, according to a new report by a panel overseeing the Treasury’s $700 billion bailout fund.

Members of the Congressional Oversight Panel, in a report due out Thursday, note that America’s broad financial rescues had more impact internationally than the narrower bailout programs of other countries had on U.S. firms.

They cite as a case study the bailout of insurance giant American International Group. While the Treasury committed up to $70 billion to AIG through its Troubled Assets Relief Program, the report states, much of that money ended up in the coffers of foreign trading partners in France, Germany and other countries. The cash that the United States poured into AIG alone equaled twice what France spent on its total capital injection program, and half what Germany spent.

The AIG bailout was the most controversial part of the initial TARP actions.  More than a few people wonder why the government chose to rescue AIG rather than just directly float its customers, and the new report will raise that question once again.  Instead of targeting the actual damage, the flow through AIG wound up making the destination of taxpayer money much less transparent, with the effect of becoming a generalized bailout for the entire industry using AIG as a clearinghouse for the cash.

Elizabeth Warren, the chair of the panel, emphasizes that the TARP managers had “no data about where this money was going,” which meant that the Bush and Obama administrations couldn’t — or wouldn’t — pressure other nations to contribute to the salvation of firms in their own countries.  Instead, the US taxpayer indemnified the losses, while other nations carefully limited their expenditures to avoid a repeat of that model.

None of this is a big surprise, of course.  The lack of oversight in TARP’s promiscuous spending has been well known since its inception, and especially in regard to AIG.  It will be interesting to see the scope of the bleeding, if indeed the panel can even identify it to this day.