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Rawstory
Thursday, January 7th, 2010 -- 2:32 pm
The controversy surrounding Treasury Secretary Tim Geithner's role in the 2008 Wall Street bailouts was ramped up Thursday with the revelation of emails that show the New York Federal Reserve -- then run by Geithner -- pressured insurance giant AIG to withhold information about payments the company made to its creditors.
Rep. Darrell Issa (R-CA) obtained emails between AIG employees showing that the company had planned to disclose in its filings to the SEC that it had paid 100 cents on the dollar to creditors like Goldman Sachs and other banks, but "the New York Fed crossed out the reference," Bloomberg News reports.
AIG has received $183 billion in taxpayer relief. The news that the New York Fed attempted to keep from the public how that money was spent will likely increase political opposition to Geithner's appointment as Treasury Secretary.
As Shahien Nasiripour notes at the Huffington Post, a report (PDF) last fall from the inspector general for the TARP bailout found that the New York Fed pressured AIG into paying creditors like Deutsche Bank, Goldman Sachs, Merrill Lynch and Wachovia 100 cents on the dollar for failed insurance agreements known as credit default swaps, even though AIG was actively negotiating with those banks to pay them less. If AIG had had its way, it would have saved taxpayers money. But the Fed's intervention ensured taxpayers would be on the hook for all of AIG's bad debts.
The report therefore appeared to be definitive evidence that the Federal Reserve was far more concerned with the well-being of Wall Street than the well-being of the taxpayers bailing out Wall Street firms.
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