This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8483648.stm

The article has changed 5 times. There is an RSS feed of changes available.

Version 0 Version 1
AIG rescue defended by Geithner AIG rescue defended by Geithner
(20 minutes later)
US Treasury Secretary Timothy Geithner has said he acted properly in the 2008 bail-out of insurer AIG. 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 bail-out. 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 have been accused of keeping details of the deal secret. 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.
Former Treasury Secretary Henry Paulson and Neil Barofsky, special investigator general for the Troubled Asset Relief Program, will also face questions.
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 face value for assets. 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."