WASHINGTON: Treasury Secretary Timothy Geithner drew sharp criticism from Democrats and Republicans alike Wednesday for his role in the $180-billion-plus taxpayer bailout of insurance giant American International Group, with some challenging his claim that he played no role in withholding information about AIG deals with business partners.
When President Barack Obama picked the then-New York Fed chief on Nov. 24, 2008, “I withdrew from monetary policy decisions... and day to day management of the New York Fed,” Geithner told a congressional panel. But one member after another lit into Geithner, venting rising public frustration over bank bailouts and bonuses as Wall Street firms recovered from the recession but unemployment remains at 10 percent.
Rep. Stephen Lynch, a Massachusetts Democrat, told Geithner: “It just stinks to the high heaven what happened here. The disclosure was not there at the proper time to tell the American people and tell this Congress what was going on.” Rep. Marcy Kaptur, Ohio Democrat, told Geithner he was more beholden to banks than he was to taxpayers when he ran the New York Fed and cut him off abruptly when he tried to deny it.
“The consequences would have been catastrophic,” had the government not bailed out AIG, the largest US insurer, Geithner said. “It was in the best interest of the Fed and the incoming administration” for him to step down from day-to-day oversight of the Fed once Obama nominated him, he said. Geithner added: “I don’t think there was a better alternative available.” AIG eventually received an aid package from the government of more than $180 billion. At issue before the committee is the part of this money to repay banks that were its business partners, known as counterparties, and efforts by the government to cover up details of the payments. “I played no role in those decisions,” Geithner said. “I will take complete responsibility for decisions I played a role in shaping,” he said. But as to the AIG matter, he said, “I was not involved in decisions about what to disclose about the individual transactions or the names of counterparties. But I have enormous trust and confidence in the integrity and judgment of those who were.”
“Many people, including people of this committee, have a hard time believing Secretary Geithner entered into an absolute cone of silence,” California Rep. Darrell Issa, the committee’s top Republican, told him.
In a particularly sharp exchange, Rep. John Mica, a Florida Republican, told Geithner “Either you were in charge and did the wrong thing or you participated in the wrong thing.”
