Full support?

11 January 2010 By James Pethokoukis

Political appointees tend to lose their support the same way a person goes broke slowly, then all at once. The latest AIGrelated emails are corrosive for the embattled U.S. Treasury secretary, but not decisive. Still, he has bled enough that this year could well be his last.

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U.S. lawmakers want Treasury Secretary Timothy Geithner to testify on whether the New York Federal Reserve improperly pressured American International Group not to disclose some information relating to payments it made to bank counterparties after its government bailout. The Obama administration and the New York Fed said that Geithner, who headed the bank at the time of the AIG rescue, was unaware of any advice by Fed lawyers to limit disclosures.

Email correspondence released by Republican Congressman Darrell Issa shows that outside attorneys for the New York Fed recommended that information on specific payments to banks be excluded from a December 2008 Securities and Exchange Commission filing by AIG. The New York Fed lawyers proposed that AIG delete an explicit reference to banks receiving 100 cents on the dollar to liquidate credit default swaps.

A total of $62 billion in payments to specific counterparties was later disclosed by AIG in March 2009.

Edolphus Towns, chairman of the House Oversight Committee, said he had asked Geithner to testify on the matter the week of Jan. 18. Spencer Bachus, the ranking Republican on the House Financial Services Committee, asked the panel's chairman, Democrat Barney Frank, to hold a similar hearing on the AIG emails.

White House spokesman Robert Gibbs, asked by reporters whether Geithner still had President Barack Obama's full confidence, said, "of course."

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