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AIG rescue defended by Geithner | AIG rescue defended by Geithner |
(20 minutes later) | |
US Treasury Secretary Timothy Geithner has told a congressional panel he acted properly in the bail-out of AIG. | |
Mr Geithner was head of the New York Federal Reserve at the time of the insurer's bail-out in 2008. | |
Regulators have been criticised for paying AIG's counterparties face value for assets and for keeping details of the deal secret. | |
But Mr Geithner denied being involved in the disclosure of the financial terms of the deal. | But Mr Geithner denied being involved in the disclosure of the financial terms of the deal. |
"I had no role in making decisions regarding what to disclose about the specific financial terms of [the deals] and payments to AIG's counterparties," Mr Geithner said. | "I had no role in making decisions regarding what to disclose about the specific financial terms of [the deals] and payments to AIG's counterparties," Mr Geithner said. |
"But members of the New York Federal Reserve did, of course they did." | "But members of the New York Federal Reserve did, of course they did." |
Mr Geithner was appearing before the House Oversight Committee. | Mr Geithner was appearing before the House Oversight Committee. |
AIG was initially bailed out for $85bn (£52bn), but its total rescue package has since amounted to more than $180bn. | AIG was initially bailed out for $85bn (£52bn), but its total rescue package has since amounted to more than $180bn. |
'Lame excuses' | |
President Obama nominated Mr Geithner for Treasury Secretary on 24 November 2008. | |
The steps the government took to rescue AIG were motivated solely by what we believed to be in the best interests of the American people Treasury Secretary Timothy Geithner | |
On that date, "I withdrew from monetary policy decisions... and day-to-day management of the New York Fed," Mr Geithner said. | |
But the committee were sceptical of his claim. | |
"Many people, including people of this committee, have a hard time believing Secretary Geithner entered into an absolute cone of silence," said California Representative Darrell Issa, the committee's top Republican. | |
"I believe these are lame excuses," another member said. "Why shouldn't we ask for your resignation as Secretary of the Treasury?" | |
'Catastrophic consequences' | 'Catastrophic consequences' |
Mr Geithner also defended the decision to pay the counterparties, including Goldman Sachs and other Wall Street banks, face value for assets. | |
"The counterparties held insurance entitling them to full or par value of the contract. We could not credibly threaten not to pay. That meant putting AIG into bankruptcy," he said. | "The counterparties held insurance entitling them to full or par value of the contract. We could not credibly threaten not to pay. That meant putting AIG into bankruptcy," he said. |
"The steps the government took to rescue AIG were motivated solely by what we believed to be in the best interests of the American people. | "The steps the government took to rescue AIG were motivated solely by what we believed to be in the best interests of the American people. |
"We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses." | "We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses." |