Thursday, January 7, 2010

Tim Geithner is Not Your Buddy

It turns out that the New York Fed, under current Treasury Secretary Timothy Geithner, encouraged AIG to hide how much money it was paying to banks like Goldman Sacs and some European banks.

Update | 12:13 p.m. Starting in November 2008, the Federal Reserve Bank of New York under Timothy Geithner began urgingAmerican International Group, the huge insurer that the government had bailed out, to limit disclosure on payments made to banks at the height of the financial crisis, e-mail messages obtained by DealBook show.
The e-mail exchange between the bailed-out insurance giant and its regulator portray a strange reversal of roles, with A.I.G. staff arguing for the disclosure of certain details on payments for credit-default swaps to major banks, only to be discouraged by officials at, or representing, the Federal Reserve. 

AIG wanted to disclose this information because they didn't want to break the law. Geithner wanted to hide this information because he didn't want the taxpayers to find out that he was funneling taxpayer money to banks who had made stupid bets, without even asking them to share in the loss.

This is not, of course, a Democrat vs Republican issue. The dynamic here is insiders vs outsiders. Geithner is friends with all these people at the banks. They are insiders. They get paid. You are a taxpayer. Geithner has never heard of you. You get screwed.

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