Treasury Dept. to Investigate Treasury Secretary Geithner about AIG Bailout
Wednesday, January 27, 2010
-BY: Noel Brinkerhoff---- 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.SOURCE