emails released last week could see Treasury secretary
Timothy Geithner become embroiled in criminal charges for his
role in a cover up that exposes the monumental criminality behind
the $182.3 billion bailout of American International Group Inc.
In November and December 2008, The Federal Reserve Bank of
New York instructed the bailed out AIG to hide from the public
details regarding payments the insurance giant made to banks,
including Goldman Sachs Group Inc. and Societe Generale SA.
Using Fed secured taxpayer bailout money, AIG paid several
banks 100 percent of the face value of credit-default swaps,
as other financial institutions were negotiating deep discounts
for the unregulated paper assets that do not have to be backed
The decision to pay the banks in full may have cost AIG, and
therefore taxpayers, at least $13 billion over the odds.
The “backdoor bailout” of the banks, as it has
been dubbed was exposed in March 2009 after the SEC challenged
AIG’s filing, however, e-mails obtained by Representative
Darrell Issa, ranking member of the House Oversight and Government
Reform Committee, have re ignited the situation as they conclusively
expose a collusion between AIG and the Fed to deceive the public.
The e-mails between company and regulator, released last Thursday,
show that The New York Fed crossed out reference to the payments
and that AIG also omitted the details when the Securities and
Exchange Commission filing was made public on Dec. 24, 2008.
The emails, the content of which are highlighted in this
Bloomberg News article, also show that the Fed
wanted numerous other details about the AIG bailout withheld
or delayed from public oversight.
“It appears that the New York Fed deliberately pressured
AIG to restrict and delay the disclosure of important information,”
said Issa, a California Republican. Taxpayers “deserve
full and complete disclosure under our nation’s securities
laws, not the withholding of politically inconvenient information.”
Despite denials from the Treasury and the New York Fed that
Geithner was involved in the scandal, as the President of the
New York Fed at the time, his head now rests firmly
on the chopping block where he awaits his fate.
Issa is seeking
more information from the New York Fed on the matter,
following the statements of general counsel Thomas Baxter, who
declared in a letter in defense of Geithner Friday "In
my judgment, as the New York Fed's chief legal officer, disclosure
matters of this nature did not warrant the attention of the
"It's a staggering admission by Mr. Baxter that he felt
strong enough that Secretary Geithner wanted him to limit AIG's
disclosures on counterparty payments to the SEC that he says
he didn't even feel a need to bring the details to his boss'
attention," Issa said in a statement. "This letter
raises more questions on the inner-workings of the New York
Fed during one of the most pivotal periods in our nation's history."
Geithner's predecessor and Treasury Secretary at the time all
of this unfolded, Hank Paulson, also once served as Chairman
and Chief Executive Officer for Goldman Sachs, after working
for the firm for decades.
AIG’s outstanding debts to Goldman Sachs meant that $13
billion of the money handed over to AIG by Paulson went directly
to Goldman Sachs.
Meanwhile, Bear Stearns and Lehman Brothers — both investment
banks in direct competition with Goldman Sachs — were
not bailed out when bad debt forced them to cease operating
under the same circumstances as AIG.
Congressman Stearns pressed Paulson on his conflicts of interest,
stating, “Isn’t there some point where you say hey,
I’ve got a conflict of interest here, you don’t
feel any kind of scintilla of ethics on this thing at all?”
Paulson responded by claiming that he got a waiver from the
Paulson's appointment, at the height of the financial crisis,
ex-Goldman Sachs executive Neel Kashkari to oversee
the distribution of bailout monies also highlights the vast
conflict of interest surrounding this scandal.
Judge Andrew Napolitano, appearing on Shepard Smith's Fox News
show last week, stated that he believes Geithner could face
a criminal probe:
Barney Frank, a Massachusetts Democrat and chairman of the
House Financial Services Committee, said the e-mail exchanges
were “troubling” and that he plans
to hold congressional hearings on the matter.
Watch Alex Jones breakdown "bankergate" in detail: