How did the U.S. government pay $62 billion in taxpayer dollars to AIG's trading partners and then pressure the insurance giant not to disclose the details of the deal to the American public?
No one in charge seems to have any idea.
Treasury Secretary Tim Geithner, who led the New York Fed at the time, told the House Oversight and Government Reform Committee earlier today that he wasn't involved. Federal Reserve chairman Ben Bernanke said in a letter to the panel's ranking Republican Darrell Issa that he was "not directly involved in negotiations." And Hank Paulson, who ran the Treasury Department at the time, also said he had nothing to do with the issue.
"I was not involved with the negotiations," Paulson told the committee, which held a hearing today to investigate the government's controversial $182 billion bailout of AIG. "I was not involved with anything surrounding those payments."
All the denials made some lawmakers scratch their heads in disbelief.
"We have this bailout of AIG and you don't know anything about it," Rep. Dan Burton, R-Ind., told Paulson. "Mr. Geithner had nothing to do with it. It just really boggles the mind that some of the biggest people involved in this whole thing from beginning to end had nothing to do with it. They didn't know. It makes you want to think that some clerk someplace was making these decisions. I don't think anybody's going to buy that."
But lawmakers from both sides of the aisle seemed to reserve their stiffest criticism for Geithner, who was the first to testify at the hearing today.The rescue of AIG began in 2008, when Geithner led the Federal Reserve Bank of New York, which orchestrated the bailout.
Rep. John Mica, R-Fla., argued that Geithner committed errors so serious that he should be booted from office.
"You were either incompetent on the job or you were not doing your job and knew what was taking place and tried to conceal it and I think that's grounds for your removal," he said.
Among other issues, the committee is investigating allegations that the New York Federal Reserve -- under Geithner's leadership -- pressured AIG in late 2008 not to disclose information about paying its counterparties full value for financial instruments known as credit-default swaps. A number of banks both in the U.S. and abroad -- including Goldman Sachs and Societe Generale -- ultimately received a total of over $60 billion for their swaps.
The banks trading with AIG, committee chairman Edolphus Towns, D-N.Y., said today, should have taken "a haircut," or discount, on what AIG owed them, just as creditors do when the companies they lend money to fall into trouble.
In the case of AIG, he said, "nobody got a haircut. Instead they were given a piggy bank full of taxpayer's dollars and [told] help yourself."
"Taxpayers were propping up the hollow shell of AIG by stuffing it with money and the rest of Wall Street came by and looted the corpse," he said.
E-mails obtained by ABC News -- from some 250,000 documents that the Fed gave the panel following a subpoena -- have shown that the Fed wanted the SEC to store a document related to the AIG bailout "in a special area where national security files are kept" if the SEC agreed that the document should not be made public. Another e-mail showed the Fed's lawyers directing AIG to run "future SEC filings, press releases, and other significant communications" by them first.