The controversy surrounding Treasury Secretary Tim Geithner’s role in the 2008 Wall Street bailouts was ramped up Thursday with the revelation of emails that show the New York Federal Reserve — then run by Geithner — pressured insurance giant AIG to withhold information about payments the company made to its creditors.
Rep. Darrell Issa (R-CA) obtained emails between AIG employees showing that the company had planned to disclose in its filings to the SEC that it had paid 100 cents on the dollar to creditors like Goldman Sachs and other banks, but “the New York Fed crossed out the reference,” Bloomberg News reports.
AIG has received $183 billion in taxpayer relief. The news that the New York Fed attempted to keep from the public how that money was spent will likely increase political opposition to Geithner’s appointment as Treasury Secretary.
As Shahien Nasiripour notes at the Huffington Post, a report (PDF) last fall from the inspector general for the TARP bailout found that the New York Fed pressured AIG into paying creditors like Deutsche Bank, Goldman Sachs, Merrill Lynch and Wachovia 100 cents on the dollar for failed insurance agreements known as credit default swaps, even though AIG was actively negotiating with those banks to pay them less. If AIG had had its way, it would have saved taxpayers money. But the Fed’s intervention ensured taxpayers would be on the hook for all of AIG’s bad debts.
The report therefore appeared to be definitive evidence that the Federal Reserve was far more concerned with the well-being of Wall Street than the well-being of the taxpayers bailing out Wall Street firms.
The emails obtained by Rep. Issa show that AIG was aware that the New York Fed’s insistence on hiding the debt payments was questionable. Huffington Post reports:
In a March 12, 2009, e-mail, Kathleen Shannon, an AIG in-house lawyer and senior vice president, told AIG executives that the firm needed to come up with a reason, per the New York Fed, for why it wasn’t going to publicly disclose details regarding payments to counterparties.
“In order to make only the disclosure that the Fed wants us to make…we need to have a reasonable basis for believing and arguing to the SEC that the information we are seeking to protect is not already publicly available,” Shannon wrote in an e-mail sent at 10:55 p.m. on March 12.
“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information to the SEC,” Issa said in a statement, as quoted at Bloomberg and Huffington Post. “The American taxpayers, who own approximately 80% of AIG, deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.
“This news ought to serve as a cautionary tale to those who advocate giving the Federal Reserve even more power over the U.S. economy. The lack of transparency and accountability is disturbing enough, but the outstanding question that remains is why the [New York Fed] didn’t fight for a better deal for the American taxpayer.”
In all, AIG paid $62.1 billion in credit default swaps to its creditors at the insistence of Geithner’s New York Fed, Bloomberg reports, amounting to what critics call an additional “backdoor bailout” of the large banks that received the money.
Lawmakers from both sides of the aisle, including Oregon Democrat Peter DeFazio, have called for Geithner’s resignation over his role in the TARP bailout. DeFazio has argued that firing Geithner, along with White House economic director Larry Summers, would send a strong signal that the Obama administration is breaking with the economic circle that was running Wall Street and the Fed when the economic collapse took place.
‘Like George W. Bush after 9/11’: Kayleigh McEnany declares Trump Bible photo op a historic moment
White House Press Secretary Kayleigh McEnany on Wednesday defended the use of force against protesters in order to clear way for President Donald Trump's photo op at St. John's Episcopal Church.
At her daily press briefing, McEnany was asked why it was necessary for Trump to walk to the church, where held up a Bible.
McEnany suggested that Trump's photo op had been a historic moment.
"This was a very important moment," she explained. "I would note that through all of time, we've seen presidents and leaders across the world who have had leadership moments and very powerful symbols that were important for a nation to see at any given time, to show a message of resilience and determination."
When police killed Breonna Taylor in her own bed it wasn’t caught on video
Whatever you think about the unrest gripping this country–whether you’re outraged by cops’ across America brutally repressing peaceful protesters or the people breaking windows and looting businesses–the proximate cause was officer Derek Chauvin, who was still on the job despite being named in 18 previous complaints, slowly murdering George Floyd on the street–compressing his throat for 8 minutes and 46 seconds–as other officers looked on and a small crowd screamed that Chauvin was killing him. That video quickly went viral and here we are.
US suspends flights by Chinese airlines in spat with Beijing
Washington on Wednesday ordered the suspension of all flights by Chinese airlines into and out of the United States after Beijing failed to allow American carriers to resume services to China.
The move adds to a growing set of tension points between the world's two biggest economies in the aftermath of the coronavirus crisis.
The US action, which takes effect June 16, but could be implemented sooner if President Donald Trump orders it, affects four Chinese civilian carriers, including Air China and China Eastern Airlines, the Department of Transportation said.
"US carriers have asked to resume passenger service, beginning June 1st. The Chinese government's failure to approve their requests is a violation of our Air Transport Agreement," the department said in a statement.