Wednesday, January 27, 2010
Timothy Geithner
Special prosecutor Neil Barofsky, charged by the Department of the Treasury with investigating the federal government’s bailout of Wall Street in 2008, is now turning his attention to the rescue of AIG by the New York branch of the Federal Reserve—which means examining the actions of Treasury Secretary Timothy Geithner. It was Geithner who was in charge of the New York Fed in the fall of 2008 when the decision was made to pay off banks that had billions of dollars in securities insured by AIG.
Among the issues being investigated by Barofsky are why the Fed in Manhattan sought to keep the names of AIG’s trading partners a secret, and why it was reluctant to acknowledge that banks received 100 cents on the dollar for their AIG contracts when they agreed to tear them up.
The Fed’s decision to aid AIG’s partners to the tune of $62 billion has been called a “backdoor bailout” by some lawmakers.
Geithner has agreed to testify before a House committee conducting its own investigation into the AIG affair. Republican members intend to grill the Treasury secretary about his decisions in November 2008 as the New York Fed’s chairman to prop up AIG by fully reimbursing banks that had used the insurance giant to insure their toxic assets.
-Noel Brinkerhoff
An Investigator Presses to Uncover Bailout Abuse (by Mary Williams Walsh, New York Times)
N.Y. Fed Investigated by Treasury’s Barofsky Over AIG Bailout (by Hugh Son, Bloomberg)
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