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Geithner’s Fed tried to keep sweet deal for banks a secret: Issa

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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.

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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.

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“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.

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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.

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Trump only sees coronavirus as ‘something he needs to manage for his re-election’: MSNBC’s Chris Hayes

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On MSNBC Wednesday, host Chris Hayes blasted President Donald Trump's leadership abilities in the midst of the coronavirus emergency — and warned that the president is putting himself and his political prospects before any consideration of what would actually protect the country.

"One of the most important things the federal government is supposed to do is manage risk that cannot be managed by private citizens of the private sector because they are big risks. Said Hayes. "Call them tail risks. Unlikely — in some cases highly, highly unlikely — events that could be truly catastrophic if the government fails. That was Hurricane Katrina for the George W. Bush administration. Financial crisis for both the Bush and Obama administrations. On this administration, the response to Hurricane Maria in Puerto Rico. Now, it could be coronavirus."

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‘He has no clue’: Internet slams Trump’s ‘breathtaking’ incoherence at coronavirus press conference

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On Wednesday, President Donald Trump gave a barely intelligible press conference on the coronavirus outbreak, during which he claimed he saved America by shutting down flights, appointed Vice President Mike Pence to lead a coronavirus task force despite having few qualifications to do so, suggesting his public health budget cuts are no big deal because he can just hire more doctors later, and insisting that it was Democrats, rather than the epidemic, that tanked the stock market this week.

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Trump said coronavirus won’t spread — his scientists said the opposite right in front of him: Congresswoman

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Rep. Donna Shalala (D-FL) blasted President Donald Trump after his press conference Wednesday because he contradicted his own scientists on the coronavirus.

During an MSNBC discussion after the Q&A, the Congresswoman explained that it only confuses Americans more.

"He's not doing very well on the coronavirus," she said. "Because the test of leadership is not talking about something you know very little about and he just confused the American people about whether this virus is going to spread. All the scientists said it is going to spread and the president gave the opposite impression. And presidents have to know that when they're in a situation like this with complicated science, they put the scientists, physicians in front of them, preferably, by the way, in white coats, and let them reassure the American people."

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