{"id":168731,"date":"2010-01-10T10:47:55","date_gmt":"2010-01-10T15:47:55","guid":{"rendered":"http:\/\/nw0.eu\/2010\/01\/10\/geithner%e2%80%99s-fed-told-aig-to-hide-%e2%80%9cbackdoor-bailout%e2%80%9d.html"},"modified":"2010-01-10T10:47:55","modified_gmt":"2010-01-10T15:47:55","slug":"geithner%e2%80%99s-fed-told-aig-to-hide-%e2%80%9cbackdoor-bailout%e2%80%9d","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/168731","title":{"rendered":"Geithner\u2019s Fed told AIG to hide \u201cbackdoor bailout\u201d"},"content":{"rendered":"
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Michael Hampton
\nHomeland Stupidity<\/a>
\nSunday, January 10th, 2010<\/span><\/p>\n

The Federal Reserve Bank of New York, during its $180 billion
\nbailout of American International Group, Inc., instructed AIG to omit
\ndetails of its purchase of certain toxic assets from a December 24,
\n2008, Securities and Exchange Commission filing, according to e-mails between the company and the Fed<\/a> released Thursday.<\/p>\n

Using bailout money provided by the Fed, AIG paid a number of banks
\n100 percent of the face value of credit-default swaps, contracts tied
\nto subprime home loans, at a time when other institutions were
\nnegotiating deep discounts for the paper. The names of the banks were
\nalso omitted from the SEC filing.<\/p>\n

The information was finally disclosed in March 2009 after the SEC
\nchallenged AIG\u2019s filing, prompting lawmakers and analysts to call
\nthe transactions a \u201cbackdoor bailout\u201d of the banks. Topping
\nthe list<\/a> of banks which benefited from the backdoor bailout of their toxic paper were Goldman Sachs and Societe Generale SA.<\/p>\n

\"AIG<\/p>\n

The e-mails, released Thursday by Rep. Darrell Issa (R-Calif.),
\nranking member of the House Oversight and Government<\/a> Reform Committee,
\nshow the Fed wanted a number of other details about the AIG bailout
\nwithheld or their disclosures delayed.<\/p>\n

The coverage from Bloomberg News has all the gory details<\/a>,
\nincluding a non-denial denial that Treasury Secretary Timothy Geithner,
\nwho was then chairman of the New York Fed, had anything to do with the
\ncover-up.<\/p>\n

Rep. Barney Frank (D-Mass.) has called the disclosure \u201ctroubling\u201d and plans to hold hearings<\/a> on the issue, though he publicly maintains full confidence in Geithner.<\/p>\n

\u201cThe new details revealed today regarding AIG\u2019s bailout
\nin 2008 come as no surprise to those of us<\/a> who believe that the
\nAmerican people deserve full transparency from the Federal
\nReserve,\u201d Rep. Ron Paul (R-Texas) said in a statement<\/a>. \u201cMy strong suspicion is that secret arrangements between cronies like this are not an anomaly, but the norm.\u201d<\/p>\n

The Fed, as you\u2019ll recall, fought disclosure of the information, claiming that it would erode market confidence<\/a>. No such thing happened, of course.<\/p>\n

If dollar investors aren\u2019t already spooked enough to run like
\nhell, it\u2019s hard to see what would convince them that the dollar
\nisn\u2019t nearly as safe as they seem to think.<\/p>\n

\u201cThe status quo has made it entirely too easy and too tempting
\nto behave recklessly with public funds in total secrecy,\u201d Paul
\nsaid. \u201cThe system needs radical change<\/a>,
\nbut we should start with honesty, transparency and accountability to
\nthe American people about how their money is being handled.\u201d<\/p>\n

Update: TheNew York Times<\/cite> reported Friday that the Treasury department explicitly denied Geithner had anything to do with it. TheTimes<\/cite> quoted<\/a>
\nTreasury spokeswoman Meg Reilly as saying Geithner \u201cplayed no
\nrole in these decisions and indeed, by Nov. 24, he was recused from
\nworking on issues involving specific companies, including A.I.G.\u201d<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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