Tags: geithner | rejects | ouster

Geithner Deflects Calls for His Resignation

Friday, 20 Mar 2009 07:07 AM

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WASHINGTON — Treasury Secretary Timothy Geithner has fended off resignation calls from Republicans but said he shouldered the blame for the political mishandling of a furor over AIG bonuses.

In a CNN interview on Thursday, President Barack Obama's top economic lieutenant insisted he learned only last week about the full extent of the politically toxic payouts by bailed-out American International Group.

But the national uproar over the $165 million in bonuses paid out by the fallen insurance giant stoked broader criticism of Geithner's stewardship of an economy in crisis, despite Obama's "complete confidence" in his ability.

"It's my responsibility. I was in a position where I didn't know about those sooner. I take full responsibility for that," Geithner said in the interview, adding the pressure for his resignation "just comes with the job."

The former head of the New York Federal Reserve said his staff informed him March 10 about the "full scale and scope" of the AIG bonuses, given largely to the division blamed for putting the firm on life support.

"We moved very quickly. We've made it clear that the payments going forward had to be renegotiated and we're going to make sure that the taxpayer is compensated for any payments we can't recoup," he said.

Geithner sidestepped a question about planned retention bonuses of more than $1 million for four government-appointed executives at bailed-out mortgage lender Fannie Mae.

But he said in general that new reforms would address excessive corporate compensation "that got completely divorced from reality" before Wall Street's boom turned to bust.

Surfing a wave of populist economic anger, the House voted overwhelmingly Thursday to slap a 90 percent tax on bonuses for top executives at rescued companies sucu as AIG.

Republicans stepped up their offensive on Geithner — and, by extension, Obama — amid a controversy that is threatening to swamp the administration's broader economic goals, including steps planned by Geithner to shore up U.S. banks.

"I think the Treasury secretary is on thin ice and the sooner we get answers to the questions we've posed, the better off he might be as well," House Republican leader John Boehner told reporters.

Some outspoken Republicans went further in calling for Geithner's head, focusing on his role in organizing the AIG bailout in September from his perch at the New York Fed.

"I look at the short time he's been in his position and there's been mistake after mistake after mistake, and this is a time when we need economic certainty," Rep. Connie Mack, R-Fla., told MSNBC.

Another House Republican, Darrell Issa, said Geithner should have asked more searching questions, either when he was leading the New York Fed or before he unveiled the latest $30-billion cash infusion for AIG on March 2.

"If he didn't ask the question then, instead of being wrong, he's incompetent," he said on Fox News.

Asked about the calls for his dismissal just two months into the Obama administration, Geithner said: "People are going to disagree with some of the choices we make, but we have to act.

"We have no choice but to move."

Neil Barofsky, the government's chief auditor for $700 billion in bank bailout funds, fueled Geithner's problems by announcing an investigation into who at Treasury knew what, and when, about the bonuses.

And Republicans also seized on remarks by Senate Banking Committee Chairman Christopher Dodd, who said he diluted a bonus-banning clause in Obama's massive stimulus bill at the behest of unidentified Treasury officials.

Geithner denied that he personally intervened with Dodd but conceded there were discussions between their staffs about Treasury fears of legal challenges to Dodd's original amendment.

He added that it should "never happen again" that a company like AIG can grow to such a point that its collapse can imperil the entire U.S. financial system.

© 2009 Agence France Presse. All rights reserved.

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