The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.
Tax cheat Geithner told AIG to keep some things hush hush
AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.
The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.
“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”
Read More: By Hugh Son, Bloomberg
Tags: AIG, Bailouts, Limit Disclosure, NY FED, Secrets, Tax Cheat Timmy, Tim GeithnerThe documents appear to contradict testimony made by Mr. Paulson to the House investigative panel this summer in which he told lawmakers that he and bank executives had not agreed on a dollar amount of TARP funds before the transaction.
"I said, ‘Ken, we do not have any kind of a specific agreement here . . . we haven’t decided on the size of the program, the dollar amount,’" Mr. Paulson said, adding that because there was no agreement, there was thus no need to disclose publicly any Treasury commitments. A spokeswoman for Mr. Paulson did not immediately respond to a request for comment.
These thugs threatened and coerced Bank of America
Kurt Bardella, a spokesman for Rep. Darrell Issa, California Republican and the senior GOP member on the House committee, said the merger was the outcome of "a collaborative effort orchestrated by Ken Lewis, Henry Paulson, Ben Bernanke, Timothy Geithner and Larry Summers."
Read More: By Kara Rowland, Washington Times
Tags: Bank of America, Ben Bernanke, forced out, Henry Paulson, Tim GeithnerIn a 2003 paper, Thomas Laubach, the US Federal Reserve’s senior economist, calculated the impact on long-term interest rates of rising fiscal deficits and soaring national debt. Applying his assumptions to the recent spike in the US fiscal deficit and national debt, long-term interests rates will double from their current 3.5pc.
The impact would be devastating by making it punitively expensive to finance national borrowings and leading to what Tim Congdon, founder of Lombard Street Research, called a “debt explosion”. Mr Laubach’s study has implications for the UK, too, as public debt is soaring. A US crisis would have implications for the rest of the world, in any case.
Using historical examples for his paper, New Evidence on the Interest Rate Effects of Budget Deficits and Debt, Mr Laubach came to the conclusion that “a percentage point increase in the projected deficit-to-GDP ratio raises the 10-year bond rate expected to prevail five years into the future by 20 to 40 basis points, a typical estimate is about 25 basis points”.
The US deficit has blown out from 3pc to 13.5pc in the past year but long-term rates are largely unchanged. Assuming Mr Laubach’s “typical estimate”, long-term rates have to climb 2.5 percentage points.
Timothy Geithner was portrayed as the indispensable man, but now no matter how much the media continue to flack for him, he’s still kissing the floor.
The Treasury Secretary aimed to cure the ills of the financial system by extracting toxic assets from bank balance sheets, replenishing the banks’ capital resources, and bolstering the housing market to prevent further foreclosures so normal lending could resume.
Has he done an adequate job? You decide?
Let us take a look at what he has “accomplished” thus far.
First, following a controversial vetting process and uninspiring beginning of his tenure, the Treasury Secretary finally struck fools gold after he utilized remnants of Henry Paulson’s plans and created the Public-Private Investment Program to remove banks’ toxic assets. The Dow rose, calls for his resignation ceased, and Newsweek immediately declared “Geithner Hits His Stride”.
Tags: bank bailout, Barack Obama, Tarp, Tim GeithnerStephen Smith, CBS
Glad to hear you are enjoying your new power Comrade geithner
Days after GM’s CEO Rick Wagoner was forced out by the Obama administration, Treasury Secretary Timothy Geithner left open the possibility that such moves could happen again.
In an interview with CBS Evening News anchor Katie Couric, Geithner acknowledged the government has had to do “exceptional things” – citing AIG as well as Fannie Mae and Freddie Mac.
“We have changed management aboard,” he said. “And where we’ve done that, we’ve done it because we thought that was necessary to make sure these institutions emerge stronger in the future.”
When asked if he would leave open the option to pressure a bank CEO to resign, Geithner replied: “Of course.”
Tags: presidential power, Replacing Ceo's, Tim GeithnerBy Bryon York, Washington Examiner
Meet your new Bosses, they set your salary now
It was nearly two weeks ago that the House of Representatives, acting in a near-frenzy after the disclosure of bonuses paid to executives of AIG, passed a bill that would impose a 90 percent retroactive tax on those bonuses. Despite the overwhelming 328-93 vote, support for the measure began to collapse almost immediately. Within days, the Obama White House backed away from it, as did the Senate Democratic leadership. The bill stalled, and the populist storm that spawned it seemed to pass.
But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the “Pay for Performance Act of 2009,” would impose government controls on the pay of all employees — not just top executives — of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.
Tags: Barack Obama, Barney Frank, Ben Bernake, Tim GeithnerBy MONICA LANGLEY and NEAL E. BOUDETTE, Wall Street Journal
Me and my guys will take it from here
Inside a windowless, ornate room Thursday just across from the Oval Office, President Barack Obama and a group of senior economic advisers began the job of remaking the American automobile industry.
The first order of business: Oust General Motors Corp. Chief Executive Rick Wagoner. It “wasn’t the hardest decision,” said one government official.
Steven Rattner, a former investment banker who is heading the administration’s auto restructuring; chief economic adviser Lawrence Summers; and Treasury Secretary Timothy Geithner were among those gathered around the polished wood table of the Roosevelt Room in the White House’s West Wing. They were there to decide under what conditions the government would continue to prop up once-powerful Detroit car companies GM and Chrysler LLC.
Tags: Auto Industry, Barack Obama, Detroit, Tim GeithnerMartin Crutsinger, AP
This is Obama's new financial system, raining money
The Obama administration on Thursday unveiled a sweeping overhaul of the financial system designed to impose greater regulation on major players like hedge funds.
Treasury Secretary Timothy Geithner told lawmakers that the changes are needed to fix the flaws exposed by the current financial crisis, the worst to hit the country in seven decades.
The goal is to repair a system that has proven “too unstable and fragile,” he said.
“Over the past 18 months, we have faced the most severe global financial crisis in generations,” Geithner said in testimony to the House Financial Services Committee. “To address this will require comprehensive reform. Not modest repairs at the margin, but new rules of the game.”
Tags: Barack Obama, Financial System Overhaul, Tim GeithnerBy PHIL IZZO, Wall Street Journal
Obama and Geithner receive failing grades
U.S. President Barack Obama and Treasury Secretary Timothy Geithner received failing grades for their efforts to revive the economy from participants in the latest Wall Street Journal forecasting survey.
The economists’ assessment stands in stark contrast with Mr. Obama’s popularity with the public, with a recent Wall Street Journal/NBC poll giving him a 60% approval rating. A majority of the 49 economists polled said they were dissatisfied with the administration’s economic policies.
On average, they gave the president a grade of 59 out of 100, and although there was a broad range of marks, 42% of respondents rated Mr. Obama below 60. Mr. Geithner received an average grade of 51. Federal Reserve Chairman Ben Bernanke scored better, with an average 71.
Tags: Barack Obama, Economists, Economy grades, Tim GeithnerCamille Page, Salon
Obama's bumbling bunch is worsening the crisis
Yes, free the president from his flacks, fixers and goons — his posse of smirky smart alecks and provincial rubes, who were shrewd enough to beat the slow, pompous Clintons in the mano-a-mano primaries but who seem like dazed lost lambs in the brave new world of federal legislation and global statesmanship.
Heads should be rolling at the White House for the embarrassing series of flubs that have overshadowed President Obama’s first seven weeks in office and given the scattered, demoralized Republicans a huge boost toward regrouping and resurrection. (Michelle, please use those fabulous toned arms to butt some heads!)
First it was that chaotic pig rut of a stimulus package, which let House Democrats throw a thousand crazy kitchen sinks into what should have been a focused blueprint for economic recovery. Then it was the stunt of unnerving Wall Street by sending out a shrill duo of slick geeks (Timothy Geithner and Peter Orszag) as the administration’s weirdly adolescent spokesmen on economics. Who could ever have confidence in that sorry pair?
Tags: Barack Obama, Bumbling Bunch, economic crisis, Lawrence Summers, Obama's Staff, Rahm Emanuel, Robert Gibbs, Tim Geithner
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