Cover-up, not crime

27 January 2010 By Richard Beales Follow @richardbeales1

The U.S. Treasury chief endured congressional questioning that ran the gamut from spoton to grandstanding. How AIG counterparties got paid remains controversial. But the New York Fed’s apparent inclination to obscure the outcome may turn out to be Geithner’s bigger problem.

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Timothy Geithner, the U.S. Treasury secretary, testified on Jan. 27 before the House Oversight Committee. The hearing was entitled: "The Federal Bailout of AIG."

Hank Paulson, former Treasury secretary, also testified.

American International Group <AIG.N> was initially rescued on Sept. 16, 2008.

In a report dated Nov. 17, 2009, the special inspector general for the U.S. Treasury's Troubled Asset Relief Program analyzed payments made after the bailout to banks including Societe Generale and Goldman Sachs. The SIGTARP among other things considered whether the payments had amounted to a "backdoor bailout" for those banks.

The report concluded in general that the New York Federal Reserve had made policy decisions that limited its ability to negotiate with AIG's counterparties.

Committee testimony.

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