Momentum is building for hearings on what Tim Geithner knew and when he knew it about the New York Fed’s effort to press AIG to keep secret details of its massive federal bailout.
Rep. Barney Frank (D-MA), who chairs the House Financial Services committee, told BusinessWeek: “To the extent that there were problems in that AIG situation, we have taken steps to prevent their occurrence.”
Emails that emerged yesterday revealed that the New York Fed, then run by Geithner, pressured AIG to avoid disclosing that the troubled insurance behemoth had used its bailout funds, on the urging of the Fed, to pay its counter-parties 100 cents on the dollar on credit default swaps — a decision that may have cost taxpayers billions. Those counter-parties included Goldman Sachs, Merrill Lynch, and DeutscheBank.
Earlier today, two other lawmakers, Reps Spencer Bachus (R-AL), and Elijah Cummings (D-MD) called for Geithner, now the Treasury Secretary, to testify on the issue.
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