Frank, Bachus question treatment of foreign banks

Reps. Barney Frank (D-Mass.) and Spencer Bachus (R-Ala.) are demanding that the Treasury Department and Federal Reserve look into claims that foreign banks received better treatment than U.S. firms during the bailout of insurance firm AIG.

The criticism was first raised by Bachus, who voiced concern at a recent hearing that U.S. creditors were being forced to accept stiffer terms than their foreign counterparts, who were bailed out in full.

{mosads}In a letter to Frank, Bachus said that AIG is forcing U.S bank creditors to accept “severe reductions in the debt owed.”

Frank wrote in a letter Wednesday to Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke that while he does not know the basis for the concern, “it is a serious issue and must be addressed.”

“Clearly, any discrimination against American-owned financial institutions compared to the treatment being received by foreign-owned institutions would be unacceptable to the Congress, and I believe to the American people,” Frank wrote.

Frank said that he would consider calling a hearing if there were specific cases.

Frank and Bachus are chairman and ranking member of the House Financial Services Committee.