Geithner: Criminal or Just Incompetent ?

(11 am. – promoted by ek hornbeck)

It has been announced that House Oversight Committee Will Hold Hearing On Geithner/NY Fed/AIG Scandal

Ed Towns, the chairman of the House Oversight and Government Reform Committee, just announced that he would hold hearings into the emails that show how the New York Federal Reserve delayed disclosure of AIG counter-party payments, hiding public information from federal regulators. The statement is below.

Towns wants to hold the hearing the week of January 18, and has invited Treasury Secretary Geithner to testify.

The question is did Geithner’s New York Fed Ordered AIG to Violate Securities Law in 2008

Yves Smith over at Naked Capitalism commented on a report from Bloomberg News that just about made my eyes pop out of my head. Evidently, Darrell Issa got his hands on some 2008 emails between AIG and Tim Geithner’s New York Federal Reserve, wherein the NY Fed orders AIG to make material misstatements on SEC filings:

Bloomberg reports:

   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.

   snip

   AIG’s Dec. 24, 2008, filing was challenged privately by the U.S. Securities and Exchange Commission, which polices the adequacy of disclosures by publicly traded firms. The agency said in a letter to then-CEO Edward Liddy six days later that AIG should provide a Schedule A, which lists collateral postings for the swaps and names the bank counterparties that purchased them from the company. The Schedule A was disclosed about five months later in a filing.

Cynthia Kouril at FDL asks Deliberately flouting securities law or grossly derelict in his duties? Tough Call for Tim Geithner:

The House Banking Committee is going to have hearings on the NY Fed’s orders to AIG to make material misstatements on its 8-K filings to the SEC (and yes, the promised email timeline IS coming, it’s just not finished yet).

Bloomberg is reporting

   Representative Barney Frank said the Federal Reserve Bank of New York’s 2008 order to American International Group Inc. (AIG) to suppress disclosures of bank payments is “troubling” and he supports hearings on the issue.

   snip

   “This was a previous administration and he was acting not independently but as part of the Bush administration approach,” Frank said.

Contrast that with what the Obama White House is saying:

   

The New York Federal Reserve Bank did not bring securities law disclosures for insurer American International Group Inc. to the attention of Timothy Geithner, who headed the bank at the time of AIG’s bailout in 2008, the bank’s top lawyer said on Friday.

There are volumes of questions here. The e-mails that Rep Darell Issa (R-CA) was given only covered 5 months of communications that began in November, 2008 between the NY Federal Reserve and AIG. Those e-mails indicate that the NY Fed told AIG to withhold information the insurer’s Federal bailout.

The White House is claiming that Geithner wasn’t told

   The New York Federal Reserve Bank did not bring securities law disclosures for insurer American International Group Inc. to the attention of Timothy Geithner, who headed the bank at the time of AIG’s bailout in 2008, the bank’s top lawyer said on Friday.

   “Matters of AIG securities law disclosure were not brought to the attention of the president of the Federal Reserve Bank of New York,” Thomas Baxter, the New York Fed’s general counsel, said in a statement.

So if he wasn’t told, isn’t that a failure on his part as head of the NY Federal Reserve? And if he knew, well, we all know the answer to that.

So is this a way for the White House to get rid of Geithner, who is rapidly becoming a political liability? If Geithner resigns under fire who will the White House replace him with? Another Wall St. crony? Or someone who will push for REAL Wall St. and banking reforms and protections for Main St.?

23 comments

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    • TMC on January 10, 2010 at 10:38 pm
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    • pfiore8 on January 11, 2010 at 5:16 pm

    an incompetent thinker. because he’s arrogant. because he thinks he knows. but he has no clue that his thinking is completely outmoded.

    and he’s entitled. so are his friends. they have value. we don’t. in his eyes, really, he did the right thing. save the few. sacrifice the many.

    might is right: it’s time to end that paradigm.

    • dkmich on January 11, 2010 at 7:31 pm

    Bet it won’t be under oath.  Unless the Republicans are in charge, this is just another pile of hot air.  

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