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.
John Oliver perfectly explains the Mueller report in a way all Americans can understand
The overwhelming majority of Americans have not read the 400-plus-page report from special counsel Robert Mueller. As it stands, it's unclear how many elected officials have either. It's become a problem for Democrats, who would like to impeach the president but can't get the American people to pay attention long enough.
"Last Week Tonight" host John Oliver has a solution. In his Sunday show, Oliver outlined a vital piece of the report that outlined just one of many obstructions of justice at the hand of President Donald Trump.
After he outlined what impeachment is, he showed Trump talking about the law that claims it's for "high crimes and misdemeanors." According to Trump, he has to be accused of both because it says "and." An annoyed Oliver corrected the president's incorrect assessment.
John Oliver unleashes epic supercut of Fox News host who can’t stop bragging about learning German in high school
Fox News host Brian Kilmeade took German as his foreign language in high school. If you didn't know that, then you likely don't watch Fox News, because the host has made a claim several dozen times.
HBO host John Oliver spent a few moments out of his Sunday episode of "Last Week Tonight" to mock Kilmeade for his desire to remind people of his three years of classes frequently.
Kilmeade has talked about it so many times that his co-hosts began preempting his comment every time the country of Germany is mentioned, or the German Chancellor Angela Merkel appears on the screen.
Watch the hilarious mockery below:
Trump thinks he can create his own healthcare law that will take the issue off the table for Democrats
One of the significant issues Republicans lost on in 2018 was their nearly decade-long crusade to unmake the Affordable Care Act, known as Obamacare.
This week Trump will announce that he's running for president again, and he promises a surprise announcement while there. While it's unclear what he intends for the surprise, one thing he is talking about is a better healthcare law than the Democratic one.
According to The New York Times, Trump is "vowing to issue the plan within a month or two, reviving a campaign promise with broad consequences for next year’s contest."