Tags: US | Geithner | AIG | Hot | Seat

Geithner Called Before Congress to Explain AIG Bailout Secrecy

Friday, 08 Jan 2010 04:57 PM

Treasury Secretary Timothy Geithner will face a congressional grilling later this month about the suppression of key details on deals that funneled billions to big investment banks while he was president of the Federal Reserve Bank of New York.

Lawmakers reacted angrily Friday to revelations in e-mails sent in late 2008 and early 2009 between lawyers for the New York Fed and American International Group Inc.

The exchanges show the New York Fed wanted AIG to withhold information about deals that sent billions of dollars from the taxpayer bailout of AIG to Goldman Sachs Group Inc., Societe Generale and other major banks.

Rep. Edolphus Towns, D-N.Y., chairman of the House Committee on Oversight and Government Reform, said Friday the e-mails would prompt a thorough review of AIG's rise and fall, and its relationships with the banks that ultimately benefited from its bailout.

He scheduled a hearing for the week of Jan. 18 and requested appearances by Geithner and New York Fed General Counsel Thomas Baxter.

The decision of whether to name the banks was separate from the narrow financial disclosure matters raised in the e-mails.

But frustrated Treasury officials say lawmakers and reporters have been conflating the two issues and misrepresenting Geithner's role in the matter.

"It's been irresponsible, misleading and exhibited a reckless disregard for the truth," said Jake Siewert, senior counselor to Geithner.

His language recalled the legal definition of defamation and libel of public figures.

Baxter said in a statement Thursday that the matters discussed in the e-mails "were not brought to (Geithner's) attention."

Treasury spokeswoman Meg Reilly said Geithner "played no role in these decisions" because he had recused himself from dealing with individual companies after his November 2008 appointment as treasury secretary.

However, questions about AIG have dogged Geithner since long before the release of the e-mails, which address narrow points about how AIG's business dealings would be described in public filings.

A recent watchdog report showed that Geithner quickly approved the initial decision to send billions in bailout dollars from AIG to Goldman and other banks that helped elect him president of the New York Fed.

The report said the government may have overpaid by billions of dollars banks that have since returned to profitability and lavish pay practices.

As Treasury secretary, Geithner did not object when the Fed refused to name those banks, claiming it was trying to safeguard the taxpayer investment, and protect AIG.

The e-mails were provided by California Rep. Darrell Issa, the committee's senior Republican, and were first reported by Bloomberg News.

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Treasury Secretary Timothy Geithner will face a congressional grilling later this month about the suppression of key details on deals that funneled billions to big investment banks while he was president of the Federal Reserve Bank of New York.Lawmakers reacted angrily...
US,Geithner,AIG,Hot,Seat
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2010-57-08
Friday, 08 Jan 2010 04:57 PM
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