Probe into New York Fed e-mails
By Daniel Wagner |
January 9, 2010, Saturday
|
Print Edition
Print Edition
LAWMAKERS are preparing to investigate revelations that the Federal Reserve Bank of New York, led at the time by Timothy Geithner, pushed for greater secrecy on controversial bailout decisions.
Senate and House Republicans called on Thursday for hearings to look into e-mails showing that the New York Fed suppressed details about deals that allowed big banks to collect billions from the bailout of insurance conglomerate American International Group Inc.
The Democratic chairman of one committee said he was considering calling Geithner, who took over as treasury secretary in January 2009, to testify on the Hill.
E-mails between lawyers for the New York Fed and AIG show AIG wanted to disclose some details about billions in payments it made to cancel financial deals with banks, including Goldman Sachs Group Inc and Deutsche Bank.
But lawyers for the New York Fed, which engineered AIG's bailout with the Bush administration's Treasury Department, told AIG to remove the information from a draft.
The e-mail exchanges occurred at the height of the financial crisis in the fall of 2008. They were provided in response to a request from Republican Representative Darrell Issa.
If Geithner is called to explain his actions to Congress, it will be another tough grilling for him. Lawmakers of both parties have accused Geithner of rushing to aid Wall Street while failing to act as quickly on unemployment and the housing crisis.
"People at the grass roots are reckoning with the realities of a battered economy every day, so arguments that clearly benefit the big banks ought to be studied," said Senator Charles Grassley, the top Republican on the powerful Senate Finance Committee.
In a statement, Grassley questioned Fed and Treasury Department claims that the details of the bailout had to be kept secret so that the country would be spared bank runs and other economic problems. He said the Finance Committee should hold hearings about the US$700-billion financial bailout Congress passed at the peak of the financial crisis.
The Treasury said Geithner "played no role in these decisions" because his appointment as treasury secretary prevented him from participating in decisions about specific companies.
Senate and House Republicans called on Thursday for hearings to look into e-mails showing that the New York Fed suppressed details about deals that allowed big banks to collect billions from the bailout of insurance conglomerate American International Group Inc.
The Democratic chairman of one committee said he was considering calling Geithner, who took over as treasury secretary in January 2009, to testify on the Hill.
E-mails between lawyers for the New York Fed and AIG show AIG wanted to disclose some details about billions in payments it made to cancel financial deals with banks, including Goldman Sachs Group Inc and Deutsche Bank.
But lawyers for the New York Fed, which engineered AIG's bailout with the Bush administration's Treasury Department, told AIG to remove the information from a draft.
The e-mail exchanges occurred at the height of the financial crisis in the fall of 2008. They were provided in response to a request from Republican Representative Darrell Issa.
If Geithner is called to explain his actions to Congress, it will be another tough grilling for him. Lawmakers of both parties have accused Geithner of rushing to aid Wall Street while failing to act as quickly on unemployment and the housing crisis.
"People at the grass roots are reckoning with the realities of a battered economy every day, so arguments that clearly benefit the big banks ought to be studied," said Senator Charles Grassley, the top Republican on the powerful Senate Finance Committee.
In a statement, Grassley questioned Fed and Treasury Department claims that the details of the bailout had to be kept secret so that the country would be spared bank runs and other economic problems. He said the Finance Committee should hold hearings about the US$700-billion financial bailout Congress passed at the peak of the financial crisis.
The Treasury said Geithner "played no role in these decisions" because his appointment as treasury secretary prevented him from participating in decisions about specific companies.
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