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    U.S.Treasury Secretary Gets the Third Degree

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    NTDTelevision

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    In testimony before the House Oversight Committee – widely seen as important to his political future – Treasury Secretary Timothy Geithner said the government did what was necessary in bailing out insurance giant AIG – American International Group – in order to prevent what he called "a second Great Depression."

    [Timothy Geithner, U.S. Treasury Secretary]:

    "We did not act to protect the financial interests of individual institutions. We acted because the consequences of AIG failing would have been catastrophic for our economy and for American families and businesses."

    Both Republicans and Democrats on the Committee criticized Geithner's actions when he served as head of the New York Fed – including the decision to shelter big banks from any losses associated with AIG's failure.

    Committee Chairman Edolphus Towns is a New York Democrat.

    [Edolphus Towns, Chairman, House Oversight Committee]:

    "In the case of AIG, nobody got a haircut. Instead they were given a piggy bank full of taxpayers' dollars and said 'help yourself.'"

    Geithner defended his decision to pay full price to retire AIG debt, but he denied any role in trying to hide AIG's payments to banks with government bailout money.

    [Timothy Geithner, U.S. Treasury Secretary]:

    "I had no role in making those decisions. But as the record shows, a large number of people at the Federal Reserve Bank of New York and the Federal Reserve Board in Washington played a very active role in thinking through those very difficult choices."

    Geithner was the president of the New York Fed in September of 2008, when the first rescue loan to AIG, of $85 billion, was extended.