Oversight Panel Blasts Geithner Over AIG Bailout

Posted January 27, 2010 at 1:08pm

Updated 4:42 p.m.Angry members of the House Oversight and Government Reform Committee lashed out at Treasury Secretary Timothy Geithner on Wednesday for his alleged involvement in the Federal Reserve’s decision to use billions of taxpayer dollars to bail out the American International Group. The lawmakers took Geithner to task at the committee hearing, which was held to probe the Fed’s decision to compensate AIG’s trading partners with $62 billion in taxpayer funds. “The circumstances surrounding the payments to the counterparties has created an air of suspicion and distrust among the American people, starting with the New York Fed’s initial refusal to name the counterparties,— Chairman Edolphus Towns (D-N.Y.) said in his opening statement. Geithner, who chaired the New York Federal Reserve at the time of the bailout, repeatedly denied any role in the decision to use taxpayer funds to pay firms exposed to AIG and said he withdrew from most of the decision-making at the New York Fed when President Barack Obama nominated him to head the Treasury Department in November 2008. Geithner told lawmakers that the government’s decision to save AIG was made to protect taxpayers from economic disaster. “We did not act to protect the financial interests of individual institutions. We did not act to help foreign banks,— Geithner said in his opening statement. “We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses.— Several lawmakers were unconvinced. “It stretches credulity for us to believe that you had no role in this and didn’t know anything about it when your attorneys were sending e-mails around everywhere,— Rep. Dan Burton (R-Ind.) said. Geithner frequently bristled at questions and accusations involving his role in the AIG bailout, telling several Members “I don’t think that’s correct— and “that’s not true.— In one particularly heated exchange, Rep. John Mica (R-Fla.) told Geithner he was giving the panel “lame— answers and asked him why Congress should not call for his resignation. “Why should we not ask for your resignation as secretary of the Treasury? You’re either incompetent on the job or weren’t doing your job,— Mica said. Geithner shot back: “Congressman, you don’t know me very well. I was there. I know what I was responsible for. I take great pride in those judgments.—In an interview after Geithner’s testimony, Rep. Darrell Issa (R-Calif), ranking member of the Oversight Committee, said he was unimpressed. “He skated the real answers and talked in terms of his values and decisions instead of in terms of his responsibilities,— Issa said. “I think that when he says there were no alternatives [to the AIG bailout] he’s disingenuous.— Geithner is among several Obama economic advisers in the hot seat. Senators are divided over whether to give Federal Reserve Chairman Ben Bernanke another four years at his job. A vote in that chamber on Bernanke’s installment is set for later this week.