Geithner-led NY Fed told AIG to hide details about bank payouts

posted at 12:55 pm on January 7, 2010 by Ed Morrissey

Maybe this information would have been better to have when the Senate mulled over the appointment of Tim Geithner as Treasury Secretary a year ago.  It certainly puts new light on the official position of Democrats on outrageous outrage over the inner workings of both AIG and the bailout.  When Geithner ran the New York Fed, that organization directed AIG to hide details of its use of bailout funds to pay off banks:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year.

Jim Geraghty offers a “Heckuva job, Timmy,” and notes that in a sane world, Geithner would be clearing out his desk after this revelation.  In a sane administration, especially one that declared its devotion to openness, transparency, and honest government, a tax evader like Geithner wouldn’t have had the job in the first place.

Almost a year ago, Democrats hyperventilated over the machinations of AIG execs and screeched about their bonuses.  Now it appears that the problem wasn’t AIG at all, but the sneaky way the New York Fed and Geithner rode to Goldman Sachs’ rescue, and that of other banks.  Geithner and his cohorts wanted to make sure they covered their tracks while using AIG as both a whipping post and a money-laundering device in order to effect the rescue of politically-connected private institutions.

Should we have rescued GS and the banks?  Opinions differ, but even if we needed to do so, that should have been done with enough transparency for everyone to understand where the money went and why.  Playing shell games with the money while demonizing the people who were forced to run the laundry should have been a prescription for excluding Geithner from positions of authority — and so should have the tax evasion revelations.  Instead, the administration of Hope and Change chose obfuscation and deceit.


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NEXT THING YOU’ll tell is that he cheats on his taxes!

What? He did?

originalpechanga on January 7, 2010 at 12:56 PM

I cannot even feign outrage anymore.

OmahaConservative on January 7, 2010 at 12:56 PM

Geithner-led NY Fed told AIG to hide details about bank payouts

Unprecedented.

Historic.

cntrlfrk on January 7, 2010 at 12:56 PM

I’m sorry. Is anyone surprised?

He should go. Now.

They all should.

UnderstandingisPower on January 7, 2010 at 12:56 PM

I question the timing.

This seems too convenient an excuse to hand the position over to Chris Dodd (as was rumored yesterday.)

notropis on January 7, 2010 at 12:56 PM

One day we’ll sit around talking about how silly our concerns were when we thought Geithner was just a tax cheat.

myrenovations on January 7, 2010 at 12:59 PM

Is this more of “Hide the Decline”?

Insert witty screen name here on January 7, 2010 at 12:59 PM

What does it take to get Beavis fired?

connertown on January 7, 2010 at 1:00 PM

I question the timing.

This seems too convenient an excuse to hand the position over to Chris Dodd (as was rumored yesterday.)

notropis on January 7, 2010 at 12:56 PM

Thanks for cheering me up further…

lovingmyUSA on January 7, 2010 at 1:00 PM

Hhhmmmm, maybe Sen. Dodd as Sec. Treas. wasn’t as farfetched as we thougt. And what difference do the Senate hearings make, they are fine with a guy who lied about being a stalker. That would be Mr. Southers, future head of TSA.

Cindy Munford on January 7, 2010 at 1:00 PM

No one should be surprised. It was in Obama’s interest to keep it quiet. Now it’s in his interest to reveal it. How long before other O’bots realize they, too, can fit beneath the O’bus and stop covering for this guy?

ROCnPhilly on January 7, 2010 at 1:00 PM

I’m at a loss for words, at this point.

Every day, there’s a new revelation about this loser and his cabinet.

There is nothing more that can be said except: I will hold Obama AND his supporters responsible for their actions and/or failures. Period. Enough. Impeach.

Shiny_Tiara on January 7, 2010 at 1:00 PM

Not sure if this is actually a crime, but if it is, he needs to be brought to trial. No deals, nothing, just a public trial.

Johnnyreb on January 7, 2010 at 1:01 PM

“Hey AIG, try Turbo Tax. It’s saved me thousands!”

BobMbx on January 7, 2010 at 1:01 PM

I question the timing.

This seems too convenient an excuse to hand the position over to Chris Dodd (as was rumored yesterday.)

notropis on January 7, 2010 at 12:56 PM

Ditto.

Only thing is, would the Republicans actually have the guts to bring up Dodd’s financial shenanigans during a confirmation hearing. Or are confirmation hearings now passe?

rbj on January 7, 2010 at 1:01 PM

I’m sorry. Is anyone surprised?

He should go. Now.

They all should.

UnderstandingisPower on January 7, 2010 at 12:56 PM

I’m sorry. He can’t go. He’s the only man who can do the treasury secretary job…

/sarc

D2Boston on January 7, 2010 at 1:02 PM

I hold the press accountable.

The only one doing a job is Glenn Beck. Everyone else is just silly.

bridgetown on January 7, 2010 at 1:02 PM

I question the timing.

This seems too convenient an excuse to hand the position over to Chris Dodd (as was rumored yesterday.)

notropis on January 7, 2010 at 12:56 PM

Hey Obama! That plan sounds……awesome!

do it do it do it do it

dIb on January 7, 2010 at 1:04 PM

“…and miles to go before I sleep…”

AubieJon on January 7, 2010 at 1:05 PM

Um yeah….. We want you to restrict and delay public disclosure of those payouts….. until the right time for the President to trash you for doing what we told you to do.

highhopes on January 7, 2010 at 1:05 PM

I’m sure this has something to do with…….Booooosh!

Caper29 on January 7, 2010 at 1:05 PM

This must have happened because he clicked the wrong button in TurboBailout™. Could’ve happened to anybody.

Joe Caps on January 7, 2010 at 1:06 PM

We are the Federales..You know, the mounted police…Money, we ain’t got no money; We don’t need no money; I don’t have to show you any stink’in money.

http://www.youtube.com/watch?v=VqomZQMZQCQ

georgealbert on January 7, 2010 at 1:06 PM

He’s also holds membership in the Bilderberg Group and the Trilateral Commission. Now do you understand why he hasn’t been fired?

Alden Pyle on January 7, 2010 at 1:07 PM

Well… Tim, I guess Turbo Tax wasn’t good for you.

But wait. We have Salazar screwing us over too…. and possibly running for Gov.?

I wonder if all the dems are ^5ing themselves yet?

upinak on January 7, 2010 at 1:07 PM

Will this story make it to the MSM? Something tells me that it will be buried.

farright on January 7, 2010 at 1:07 PM

This is____________ (fill in the blank).
I’m running out of adjectives.

milwife88 on January 7, 2010 at 1:08 PM

You know Dodd was hip deep in this whole AIG mess from the start so I don’t see him just stepping in to Trubo Tax Tim’s job soon. Remember Dodd was the one who wrote the law that said they could get their bonuses and then lied about it and got caught. There is something more to this than what is just coming out right now.

Johnnyreb on January 7, 2010 at 1:10 PM

Ready from day one…. *barfs*

Yakko77 on January 7, 2010 at 1:13 PM

Once a cheat, always a cheat.
Another idiot who ought to be fired.

nyx on January 7, 2010 at 1:14 PM

You’re doin a heck of a job, TIMMAY!

wildweasel on January 7, 2010 at 1:14 PM

I hold the press accountable.

The only one doing a job is Glenn Beck. Everyone else is just silly.

bridgetown on January 7, 2010 at 1:02 PM

+10

nyx on January 7, 2010 at 1:15 PM

He probably cheated at Monopoly as a kid. Just more of the outstanding morals and ethics that Barack The Magnificent demonstrates to and demands out of his Administration.

kingsjester on January 7, 2010 at 1:16 PM

I’m just glad he’s a democrat so this doesn’t become a distraction.

PatMac on January 7, 2010 at 1:16 PM

George Bush made him to do it.

patriette on January 7, 2010 at 1:16 PM

Isn’t it interesting how Goldman Sachs got all the bail out goodies over the past couple of years? It couldn’t possibly have anything to do with the fact that this firm sends its senior management peeps to the Treasury to be Secretary of the Treasury in either an R or D administration, could it? And that GS also got its competitors wiped off the map back in 2008?

Culture of corruption.

karenhasfreedom on January 7, 2010 at 1:17 PM

It is a criminal offense to withold material Information on such filings or to cause or direct others to do so. There are no federal agency exemptions as to the latter and the individuals involved are subject to prosecution.

Holder and DOJ, of course, will not prosecute these violators, but the RNC and Senate Republicans should get off their asses and start screaming about it.

TXUS on January 7, 2010 at 1:17 PM

“Hey AIG, try Turbo Tax. It’s saved me thousands!”

BobMbx on January 7, 2010 at 1:01 PM

I laughed so hard…

nyx on January 7, 2010 at 1:18 PM

There’s a college professor that lives a few houses down the street from me with is Obama bumper stickers prominently displayed on his car. He walks around with his sanctimonious head stuck up his sanctimonius arse. I’d like to strangle him for giving us Obama, Geithner, et. al…but his head is so far up his rectum I can’t reach his neck.

sdd on January 7, 2010 at 1:19 PM

Makes one wonder how much money dear tim has socked away from this? This man is a crook, imo, and I would not put anything passed him.
L

letget on January 7, 2010 at 1:19 PM

Geithner didn’t want it disclosed that AIG was a conduit to bail out Goldman Sachs and Societe Generale, a foreign bank, with US taxpayers’ money.

Emperor Norton on January 7, 2010 at 1:19 PM

Appoint Special Procecutor. Send the SOB to jail!

bluegrass on January 7, 2010 at 1:20 PM

Almost a year ago, Democrats hyperventilated over the machinations of AIG execs and screeched about their bonuses. Now it appears that the problem wasn’t AIG at all, but the sneaky way the New York Fed and Geithner rode to Goldman Sachs’ rescue, and that of other banks. Geithner and his cohorts wanted to make sure they covered their tracks while using AIG as both a whipping post and a money-laundering device in order to effect the rescue of politically-connected private institutions.

weren’t there bus tours to AIG folks’ homes to deliver the creepy leftists to their shrine for the obligatory Two Minutes Hate (“1984″ reference George Orwell)?? Now, it turns out that the administration that quoth “my administration is the only thing between you (AIG) and people with pitchforks” employs the very guy that scapegoated AIG….our very own lil’ buddy Timmy “Money” Geithner….

say it ain’t so Joe.

ted c on January 7, 2010 at 1:20 PM

Sorry, all financial information concerning preparations for realignment of the United States government are proprietary, and cannot be released without the express permission of Obama Inc., or one of its government-controlled subsidiaries.

RBMN on January 7, 2010 at 1:23 PM

I’m just glad he’s a democrat so this doesn’t become a distraction.

+100

WitchDoctor on January 7, 2010 at 1:24 PM

I just heard that he’s out of a job and – get this- Chris Dodd is going to get his appointment. I can’t imagine them ever trying such a foolhardy thing -but then again, I’ve been saying that every day for a year now….

Don L on January 7, 2010 at 1:25 PM

This is____________ (fill in the blank).
I’m running out of adjectives.

milwife88 on January 7, 2010 at 1:08 PM

Business as usual?

The new normal?

cntrlfrk on January 7, 2010 at 1:26 PM

OT: Anyone talk about this yet?

C-Span only allowd an hour of Coverage for Healthcare?

upinak on January 7, 2010 at 1:26 PM

Turbo Tax Timmeh. And before that, Henry Zippy Paulson. Both massively incompetent and up to their necks in the shyte.
May be time to just abolish the Sec Treas. position.

james23 on January 7, 2010 at 1:26 PM

Q : What’s that sound?

A : It’s just the acceleration of the bus as it approaches a speed bumb(s).

The mysterious leaks of incompetence always precede vehicular mishaps.

Fuquay Steve on January 7, 2010 at 1:27 PM

This is____________ (fill in the blank).
I’m running out of adjectives.

milwife88 on January 7, 2010 at 1:08 PM

Hold my Hair! I am going in to the adjectives not used for public pull!

upinak on January 7, 2010 at 1:27 PM

Maybe this information would have been better to have when the Senate mulled over the appointment of Tim Geithner as Treasury Secretary a year ago.

You mean that confirmation hearing chaired by the Senator from Connecticut AIG?

Perhaps there is more to that retirement than we know just yet. One can certainly question the timing!

rockmom on January 7, 2010 at 1:28 PM

How about we get rid of the Turbo Tax Weasel and put Chris Countrywide Dodd in there?

forest on January 7, 2010 at 1:29 PM

The Democrats are just shills for Wall Street and they have to be. The Dems control New York. Without the tax revenue from Wall Street fat cats, NY could not pay its bills (not that they can now anyway).

WashJeff on January 7, 2010 at 1:29 PM

Fat cats? They’re a delicasy in china!

Fuquay Steve on January 7, 2010 at 1:31 PM

Do we have an extradition treaty with Ireland? /

OmahaConservative on January 7, 2010 at 1:32 PM

Ya know, with 6-8 of these things coming across the wire *per day* now, the remaining pieces of my head are no longer explodable.

Midas on January 7, 2010 at 1:32 PM

I can’t fake outrage either. I’m done.
At the moment though this looks contrived to me. Dodd as Treasury Sec came out yesterday right?
My God there is not much right now that is not totally orchestrated.
I still agree though, this is what we are supposed to be focussed on. I hope someone is digging somewhere else.

ORconservative on January 7, 2010 at 1:33 PM

At what point in time do any of the actions of our current government deserve criminal charges? This is why we have such a corrupt government, along with the money it filters, no one is ever held to account.

astonerii on January 7, 2010 at 1:34 PM

upinak on January 7, 2010 at 1:26 PM

I saw that earlier. It was a “staged” debate in the White House a while back. Total BS. There is now way in the world they are going to allow anyone to be “in on the talks” of anything.

milwife88 on January 7, 2010 at 1:35 PM

It’s threads like these that I really miss BleedsBlue and his insightful way of explaining how this is a good thing.

Blue…hello Blue? Helloooooooo…?

PALIN!

Blue?

Bishop on January 7, 2010 at 1:35 PM

Don’t worry – there’s no way they’ll screw up your healthcare! /SARC

gwelf on January 7, 2010 at 1:35 PM

This is____________ (fill in the blank).
I’m running out of adjectives.

milwife88 on January 7, 2010 at 1:08 PM

This is former President, Barack Obama.

There, I picked my favorite.

Make it happen, America.

Shiny_Tiara on January 7, 2010 at 1:40 PM

Bishop on January 7, 2010 at 1:35 PM

I will try…

Tim Geithner was pressured by Bush and Paulson to keep his own plan quiet and of the press against his protestations.

or

While this is wrong, it is understandable. If the American public knew about this as it was happening, the uproar would have been too great to continue with the deal and the banking system might have collapsed. Sometimes it is better if we do not know what our government is doing.

WashJeff on January 7, 2010 at 1:40 PM

There is something more to this than what is just coming out right now.

Ya think Reb? Me too.
I’d like to know how Issa got a hold of that email. AIG insider? unknown source?
And why do all these trails seem to end up at Goldman? Hmm?

JusDreamin on January 7, 2010 at 1:40 PM

I cannot even feign outrage anymore.

OmahaConservative on January 7, 2010 at 12:56 PM

I’ve gone numb. As unbelievable as this would normally be, these days, this is the “jaywalking” of corruption in this administration.

uknowmorethanme on January 7, 2010 at 1:40 PM

The word character will never be associated with the Obama administration, and especially their head man.

tarpon on January 7, 2010 at 1:41 PM

I bet Bush made him do it.

becki51758 on January 7, 2010 at 1:48 PM

Uhm, I’m pretty sure this is prosecutable for public official criminal misconduct.

Apologetic California on January 7, 2010 at 1:48 PM

Uhm, I’m pretty sure this is prosecutable for public official criminal misconduct.

Apologetic California on January 7, 2010 at 1:48 PM

do you mean as “prosecutable” as tax evasion (Geithner)? Voter intimidation (NBPP)? Corruption (ACORN)? You mean all of those prosecutable offenses? Prosecution is a choice, and it’s not being chosen for some reason…tapping foot, scratching head…?!?

ted c on January 7, 2010 at 1:55 PM

Ahhh… Geithner and his lackluster career as the head of the NY Fed. Then moving upwards and conveniently forgetting his role in the problems he then went on to pontificate about. He tells AIG one thing in agreeing to their bailout package, forgets that he did so and then becomes ‘critic in chief’ for the very bonuses, payouts and directions that he gave just a few months before.

What a swell guy to give a promotion to, no?

Says one thing, does another and is completely untrustworthy… well at least he isn’t in a sensitive position… oh… wait.

Geithner, Paulson, and Bernanke, the clueless triplets of telling people what to do and acting so very outraged when they do things that they had agreed to. All TARPistanians who really, really said that these financial institutions would just ruin everything by… following the law and re-organizing under bankruptcy. No, lets put lots and lots of federal cash in them to prop up failing management and accounting systems that the FED encouraged them to develop over the years.

Yes that lovely ‘lack of regulations’ that told the Fed and Treasury exactly what to do with home mortgage securities… all that easy money from the Treasury and Fed… and then every politician and brown-noser screams about ‘lack of regulations’ and how ‘bad’ these financial institutions are. For doing what they were encouraged to do by the regulations that were put up by Congress. Of course the dirty work of propping up failing institutions to hide the bad system Congress set up was part and parcel of this. Which is why these ‘too big to fail’ institutions should have failed: to point out the problems that Congress had caused.

Can’t have that! Always more regulations, but never ones that make fiscal sense.

Geithner is the worst of the three, but the day they get a perp walk and a long visit to stripe city can come none too soon.

ajacksonian on January 7, 2010 at 1:55 PM

Only thing is, would the Republicans actually have the guts to bring up Dodd’s financial shenanigans during a confirmation hearing. Or are confirmation hearings now passe?

rbj on January 7, 2010 at 1:01 PM

Confirmation hearings?

We don’t NEED no STEENKIN’ CONFIRMATION HEARINGS!!!

/Dem mode

VelvetElvis on January 7, 2010 at 1:57 PM

Now it appears that the problem wasn’t AIG at all, but the sneaky way the New York Fed and Geithner rode to Goldman Sachs’ rescue

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought bought or unbought, by the military-industrial complex Goldman Sachs Den of Thieves [updated]. The potential for the disastrous rise of misplaced power exists and will persist.
Dwight D. Eisenhower

MB4 on January 7, 2010 at 1:59 PM

OK everyone, all together now, act SHOCKED!

I’m shocked.

patrick neid on January 7, 2010 at 2:11 PM

Opinions differ, but even if we needed to do so, that should have been done with enough transparency for everyone to understand where the money went and why

That’s the problem with stemming a financial panic and a run on financial institutions. When people at the Fed realized that the was nothing to prevent a complete financial system meltdown, the first priority was to hide the extent of the problem. The way to stop a panic is to tell people there’s nothing to panic about, which is by it’s very nature all about hiding the truth.

In 5 to 10 years, there will be more perspective about what happened in 2008 and how close Western capitalism as we know it came to falling into the abyss.

bayam on January 7, 2010 at 2:13 PM

In 5 to 10 years, there will be more perspective about what happened in 2008 and how close Western capitalism as we know it came to falling into the abyss.

bayam on January 7, 2010 at 2:13 PM

Or not falling in the abyss… and this was all just a huge scam…

Time will, hopefully, tell.

Romeo13 on January 7, 2010 at 2:35 PM

Gangster Government.

TheBigOldDog on January 7, 2010 at 2:53 PM

Just when you think the depth of deceit can go no deeper! How in the world did we allow these people so much power over our lives?

petunia on January 7, 2010 at 2:55 PM

We need to replace Geithner with someone who is not corrupt – like Dodds.

OK, I tried to keep a straight face.

Vashta.Nerada on January 7, 2010 at 2:58 PM

Or not falling in the abyss… and this was all just a huge scam…

Time will, hopefully, tell.

Romeo13 on January 7, 2010 at 2:35 PM

I guess cynicism is well deserved at this point… but really? That would mean Bush was in on it. That first stuff happened under Bush…

So if it was all made up so the “progressives” could take over…

Okay we are well into tin hat talk now.

The whole world did suffer a financial crisis. No one can fake that!

Can they?

petunia on January 7, 2010 at 2:58 PM

Tim Geithner adds all new meaning to being a “low-life weasel”.

pilamaye on January 7, 2010 at 3:27 PM

petunia on January 7, 2010 at 2:58 PM

Lets see…. the economy is humming along… then we implement Mark to Market accounting…

Suddenly, out of the Blue, the Bankers and Treasury tell us there is a huge crises due to bad loans, and the derivitives which were sold based on those loans, and we had to buy back those loans or the economy would collapse.

This comes straight from the people who put those rules in place in the first place.

Then, we give them 100′s of billions of dollars to buy back those Toxic assets… which within 24 hours they then decide to just give to the banks (no toxic assets were ever bought).

Crises continued for a couple of months… Obama gets elected… and then they suspend Mark to market rules, and suddenly Banks are solvent again, and pay back the TARP funds.

Bad loans are still out there… Derivitives are still being bought and sold… no real systemic changes EXCEPT suspending Mark to Market…

So…. lots of money changed hands… lots of bailouts… billions of Taxpayer dollars given to those who were in the banking business in the first place (funny how banking industry is one of the few industries reporting profits).

Never said Bush was in on it… but History is not going to be kind to him on this issue, IMO.

Romeo13 on January 7, 2010 at 3:44 PM

In Dem circles, isn’t this cause for a raise or a promotion??

reshas1 on January 7, 2010 at 3:55 PM

I admit I thought Sec. Geithner looked like Lord Farquad.

Sir Napsalot on January 7, 2010 at 4:21 PM

Can you imagine what damage these people could inflict if they were COMPETENT criminals?

I’m using TurboTax this year. I should be as rich as Geitner by May!!

PattyJ on January 7, 2010 at 4:31 PM

No seriously, is this ‘criminal’?

Sir Napsalot on January 7, 2010 at 4:54 PM

With all of their financial troubles, I want to know how AIG has been allowed to continue owning the Mt. Mansfield Corporation in Stowe, Vermont???

It has been Hank Greenburg’s private paradise and one of the major ski areas in the country for many years…and AIG continues to own it. WHY??? I thought they were in some financial trouble?

GoldenEagle4444 on January 7, 2010 at 5:26 PM

Only thing is, would the Republicans actually have the guts to bring up Dodd’s financial shenanigans during a confirmation hearing. Or are confirmation hearings now passe?
rbj on January 7, 2010 at 1:01 PM

What? You aren’t aware of the new position of “Treasury Czar?”

Oopsdaisy on January 7, 2010 at 5:45 PM

Geithner and his cohorts wanted to make sure they covered their tracks while using AIG as both a whipping post and a money-laundering device in order to effect the rescue of politically-connected private institutions.

To be fair, this is the role of all corporations in Obamerica: whipping boy, money launderer, tool, enrichment device for the well-connected.

There Goes The Neighborhood on January 8, 2010 at 10:50 AM