Make us your home page
Instagram

N.Y. Fed urged AIG silence on bailout deals

WASHINGTON — Republicans in both houses called Thursday for hearings to investigate revelations that the Federal Reserve Bank of New York, led at the time by Treasury Secretary Timothy Geithner, pushed for greater secrecy on controversial bailout deals.

E-mails between lawyers for the New York Fed and American International Group show AIG wanted to disclose details about billions in payments it made to cancel financial deals with banks, including Goldman Sachs and Deutsche Bank. But lawyers for the New York Fed, which engineered AIG's bailout with the Bush administration's Treasury Department, told AIG to remove the information from a draft.

The e-mail exchanges, first reported by Bloomberg News, occurred at the height of the financial crisis in the fall of 2008.

"People at the grass roots are reckoning with the realities of a battered economy every day, so arguments that clearly benefit the big banks ought to be studied," said Iowa Sen. Charles Grassley, the top Republican on the Senate Finance Committee.

He questioned Fed and Treasury claims that the details of the bailout had to be kept secret so the country would be spared bank runs and other economic problems. He said the Finance Committee should hold hearings about the $700 billion financial bailout Congress passed at the peak of the financial crisis.

Treasury spokeswoman Meg Reilly said Geithner "played no role in these decisions" because his appointment as treasury secretary — then President-elect Barack Obama nominated him to the post in November 2008 — prevented him from participating in decisions about specific companies.

New York Fed General Counsel Thomas Baxter said the matter would not have been brought to Geithner's attention.

Republican staff on the House Committee on Oversight and Government Reform also are drafting a letter calling for new hearings at which Geithner would testify, said Kurt Bardella, a spokesman for Darrell Issa, R-Calif., the committee's top Republican. Issa's office released the e-mails Thursday.

Geithner was president of the New York Fed at the time of the e-mail exchanges. Executives from Goldman Sachs and other Wall Street banks that benefited from the AIG deals helped elect him to that position.

A watchdog report has said Geithner and the New York Fed mismanaged the AIG rescue, potentially handing billions more than necessary to banks that have since recovered and are again paying record bonuses.

The New York Fed has countered that officials were focused on defusing the worst financial crisis in generations. It says officials were trying to protect the value of the taxpayer investment. And it says paying the banks less or sharing more information could have sparked a global financial collapse.

Baxter said the Fed's financial stake made its input appropriate, "with the understanding that the final decision rested with AIG" and its lawyers.

"Our focus was on ensuring accuracy and protecting the taxpayers' interests during a time of severe economic distress," he said. "All information was in fact disclosed that was required to be disclosed by the company, showing that counterparties received par value. There was no effort to mislead the public."

N.Y. Fed urged AIG silence on bailout deals 01/07/10 [Last modified: Thursday, January 7, 2010 11:06pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Report slams Pinellas construction licensing agency and leaders

    Local Government

    LARGO — The Pinellas County Construction Licensing Board mismanaged its finances, lacked accountability and disregarded its own rules, according to a scathing report released Wednesday by the county's inspector general.

    Rodney Fischer, the executive director of the Pinellas County Construction Licensing Board, resigned in January.  [SCOTT KEELER   |   Times]
  2. A meatless burger that tastes like meat? Ciccio Restaurants will serve the Impossible Burger.

    Food & Dining

    TAMPA — The most red-hot hamburger in the nation right now contains no meat.

    Ciccio executive chef Luis Flores prepares an Impossible Burger Wednesday at the Epicurean Hotel Food Theatre in Tampa.
  3. Construction starts on USF medical school, the first piece of Tampa's Water Street project

    Health

    TAMPA — Dozens of workers in hard hats and boots were busy at work at the corner of South Meridian Avenue and Channelside Drive Wednesday morning, signaling the start of construction on the University of South Florida's new Morsani College of Medicine and Heart Institute.

    Construction is underway for the new Morsani College of Medicine and USF Health Heart Institute in downtown Tampa. This view is from atop Amalie Arena, where local officials gathered Wednesday to celebrate the first piece of what will be the new Water Street District. The USF building is expected to open in late 2019. [ALESSANDRA DA PRA  |   Times]
  4. Tampa Bay among top 25 metro areas with fastest growing economies

    Economic Development

    Tampa Bay had the 24th fastest growing economy among 382 metro areas in the country for 2016. According to an analysis by the U.S. Bureau of Economic Analysis, Tampa Bay's gross domestic product, or GDP, increased 4.2 percent from 2015 to 2016 to hit $126.2 billion.

    Tampa Bay had the 24th fastest growing economy in the country for 2016. Rentals were one of the areas that contributed to Tampa Bay's GDP growth. Pictured is attorney David Eaton in front of his rental home. 
[SCOTT KEELER | Times]
  5. Tampa Bay cools down to more moderate home price increases

    Real Estate

    The increase in home prices throughout much of the Tampa Bay area is definitely slowing from the torrid rate a year ago.

    This home close to Bayshore Boulevard in Tampa sold for $3.055 million in August, making it Hillsborough County's top sale of the month. [Courtesy of Bredt Cobitz]