AIG may have benefited foreign banks by up to 70%.

I am told in some cases that these U.S. banks are being asked to accept reductions of over 70% of the total debt owed to them.

In a letter released by Barney Frank, the Chairman of the Committee of House Financial Services is requesting information from Geithner and Bernanke as to how AIG may have treated its U.S. bank counterparties differently from foreign banks.Frank is referencing a letter by Spencer Bachus in which the latter raises yet another aspect of the AIG debacle, namely that disproportionate treatment byBachus claims that "in contrast with [AIG's] treatment of foreign banks [which were not asked to reduce the sum they received from AIG by any amount whatsoever], AIG is now attempting to force many of its creditors that are U.S. banks to accept severe reductions in the debt owed to them.The disparity in treatment between foreign banks and U.S. banks is troubling, particularly since the U.S. banks now being asked to take such reductions are some of the very taxpayers that have been funding AIG. In addition to the clear inequity involved, this conduct obviously runs counter to our efforts to stimulate credit in the U.S. economy through bank lending."While not at the core of the problem Zero Hedge discussed previously about improper liquidations from a "stable company" generating abnormal profits at banks , any discovery in this inquiry could potentially raise yet another significant problem, namely how the U.S. is willing to bend over backwards to not displease foreign entities (and potentially purchasers of U.S. treasuries) at the expense of domestic banks. Then again, if ZH is correct in its prior claims, AIG made sure that even its U.S. counterparties would be more than compensated for any losses they may have had to taken on the abovementioned obligation discounts. And all of this would occur, of course, with U.S. taxpayers footing the bill as is standard these days.