Monday, January 18, 2010

Timmy's In Trouble

If this Reuters story at CNBC is accurate, Tim Geithner is going to have some very uncomfortable questions to answer in front of Congress on January 27th.
The New York Federal Reserve Bank actively worked with bailed out insurer AIG to build a case against disclosing details of AIG's payments to banks just days after the insurer considered making them public, documents released late on Saturday showed.

Lawyers for the Fed bank, which had taken over a pool of AIG assets as part of a $180 billion government bailout of the insurer in 2008, advised that AIG maintain a "confidential treatment request" from the Securities and Exchange Commission, according to emails provided by Rep. Darrell Issa, a U.S. lawmaker probing the matter.

A separate batch of emails made public earlier this month showed that New York Fed had advised AIG not to disclose the payments in a securities filing in late 2008.

The email traffic has raised questions about the role of Treasury Secretary Timothy Geithner, who ran the New York Fed at the time of the AIG bailout and the insurer's payment of some $62.1 billion to banks to liquidate credit default swaps it had sold to them.

Geithner is among those due to testify on the AIG payments and efforts to limit public disclosures about them at a January 27 hearing of the House of Representatives Oversight and Government Reform Committee. Former Treasury Secretary Henry Paulson also has been asked to appear before the panel.

Geithner has said Fed officials had no choice but to allow AIG to pay the banks in full, but has denied any involvement in discussions to suppress disclosures. He recused himself from matters involving AIG after being nominated for Treasury Secretary in November 2008.
And gosh, now we see why he did so.  He was neck deep in AIG from the beginning.  He was also apparently neck deep in advising AIG to keep everything as quiet as possible months before the rest of the financial sector blew up.

Timmy's got to go.  He should have never been SecTreas in the first place.  So far his appointment has been President Obama's only really bad mistake.

And for this.

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