U.S. lawmakers in the House of Representative skewered Treasury Secretary Timothy Geithner in a hearing over the $180 billion bailout of insurance giant AIG. Geithner’s credibility was repeatedly questioned by both Democrats and Republicans over the Treasury Secretary’s claim of complete ignorance of the Federal Reserve’s efforts to cover-up details of the bailout. At the heart of the criticism was AIG’s decision to keep secret $62 billion that was paid directly to banks to keep them from taking a loss. Banks, such as Goldman Sachs, were paid 100 cents on the dollar, while other financial players were asked to take what is called a “haircut” and paid pennies on the dollar. Listen to Representative Stephen Lynch rail on Secretary Geithner over the bad deal taxpayers got:
Geithner took exception to the criticism. He held his ground by saying he and others did what they thought was right. Geithner said the decision to bailout AIG was “the best of a terrible set of choices … There was a basic calamitous breakdown in the fabric of our system.”
Geithner’s predecessor at Treasury, Hank Paulson, fared a little better in the hearing. Paulson contends that saving AIG was a Fed operation, and he had nothing to do with it. Paulson did admit that at least some of the money for the bailout of AIG came from the printing press. Listen to Paulson’s testimony closely as he is pressed by Representative John Tierney.
There will be more to come on the AIG bailout. In the meantime, look at the pattern of secrecy that has been happening since the financial crisis started. The Federal Reserve is involved in secret bailouts of the banks, both domestic and foreign. The details of the shotgun marriage of Bank of America and Merrill Lynch were also hidden from the public. AIG is just another in a string of secrets kept from the taxpayer. Let’s hope the taxpayer gets transparency.
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.