Gov. Paterson (D-NY): AIG Contribution not related to AIG rescue.

Good thing that he cleared that up:

AIG’s $100G donation to Democrats was unknown to Gov. Paterson, he says

Gov. Paterson stuck to his guns Saturday, insisting he knew nothing about a $100,000 donation from AIG to the state Democratic Party days before his office helped save the insurance giant.

State Republicans charged the Democrats with stonewalling an investigation into the Aug. 29 donation, uncovered last week by The Associated Press.

In the first week of September, Paterson launched negotiations to save the financially strapped company. GOP officials questioned whether there was a quid pro quo.

Otherwise suspicious individuals might ask whether September’s relief efforts were perhaps lubricated by such a transaction. Paterson’s intervention stopped the company’s financial free-fall back then, and it took place two weeks after AIG made a donation to the state Democratic party that was ten times higher than previous contributions. But Paterson, the Democrats, and AIG are all swearing that there was no quid pro quo. Or pay-for-play.

What makes this interesting is that the explanation exculpating Paterson assumes a fairly significant bit of ignorance on his part: shouldn’t he have known that AIG had given his party one hundred grand two weeks earlier? Why didn’t AIG tell him that this had happened? For that matter, why didn’t the state Democratic party? Back in August of 2008 AIG was merely a company having a bad couple of quarters: the public meltdown didn’t take place until a few weeks later. So it seems a little surprising that such a large and unprecedented donation from a financial powerhouse wouldn’t be brought to the attention of Patterson, as head of the New York Democratic Party… particularly since he was also the Governor, and as such would need to avoid even the appearance of impropriety.

Alternatively, you could take the position that Paterson is lying; he knew about the contribution all along, but didn’t want to give it back once he had to go bail out AIG. Which is better than a third alternative – he’s lying, this was a pre-payment for the AIG rescue, and that half of the state government of New York could probably be successfully prosecuted under RICO at this point – but it’s not particularly good.

Moe Lane

Crossposted to Moe Lane.