06/28/2010 05:12 am ET | Updated May 25, 2011

Neil Barofsky, TARP Watchdog: Criminal Charges Could Be Coming For New York Fed In AIG Scandal

The government-appointed watchdog for the government's $700 billion bailout program says that the New York Federal Reserve could be hit with criminal or civil charges for its role in the $180 billion rescue of AIG.

Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program, who has previously singled out Treasury Secretary Tim Geithner in a report on the AIG bailout, may now have his sights set on the New York Federal Reserve Bank, Bloomberg Markets reports. (Hat tip to Zero Hedge.)

Geithner, formerly the head of the New York Fed, was lambasted by Barofsky in a November report for failing to negotiate with AIG's counterparties as the bank unwound the insurer's billions in derivatives deals. Goldman Sachs, Merrill Lynch and Wachovia were given 100 cents on the dollar for rapidly souring derivatives contracts during the New York Fed's intervention under Geithner.

But, poor negotiation skills aside, Barofsky is reportedly focusing more on the New York Fed's attempts to cover up the details of the AIG bailout. Under Geithner, the agency refused for more than a year to reveal key details of AIG's counterparties. Former New York Governor Eliot Spitzer has been one of many to push for the government to release internal emails regarding the bailout of AIG.

Here's Bloomberg Markets:

Barofsky says the question of whether the New York Fed engaged in a coverup will result in some sort of action.

"We're either going to have criminal or civil charges against individuals or we're going to have a report," Barofsky says. "This is too important for us not to share our findings."

He won't say whether the investigation is targeting Geithner personally.