January 9, 2010

It seems that there is an explanation of Tim Geithner's actions in the backdoor AIG bailout: He didn't know, according to the NY Fed's general counsel:

Jan. 9 (Bloomberg) -- Timothy Geithner, the former Federal Reserve Bank of New York president, wasn’t aware of efforts to limit American International Group Inc.’s bailout disclosures because the regulator’s top lawyer didn’t think the issue merited his attention, the attorney told lawmakers.

“Matters relating to AIG securities law disclosures were not brought to the attention of Mr. Geithner,” Thomas Baxter, general counsel of the New York Fed, said yesterday in a letter to Representative Darrell Issa, a California Republican, and Edolphus Towns, Democrat of New York. “In my judgment as the New York Fed’s chief legal officer, disclosure matters of this nature did not warrant the attention of the president.” Geithner, who helped orchestrate the bailout of AIG when he led the New York Fed, is now Treasury Department secretary.

Geithner and Baxter were asked yesterday to testify before the House Oversight and Government Reform Committee about e- mails from the New York Fed in 2008, when Geithner led the regulator, asking AIG to withhold data about payments to banks. Firms including Goldman Sachs Group Inc. and Societe Generale SA were fully reimbursed on swap guarantees from AIG, prompting Issa to call its rescue a “backdoor bailout” of banks.

Issa said it was “staggering” that Baxter felt he didn’t need to notify Geithner about discussions with New York-based AIG about what records the insurer should make public in Securities and Exchange Commission filings. Baxter’s “letter raises more questions on the inner-workings of the New York Fed during one of the most pivotal periods in our nation’s history,” he said in an e-mail.

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