AIG Bailout, Geithner Blasted Hard on Capitol Hill

But committee staff on the Democratic side said Tuesday night that there was "no evidence suggesting Geithner knew about it much less was involved" in the disclosure decisions.

That backs up Geithner's previous statements denying any involvement in the issue and what he said today.

Geithner testified today that after being asked by Obama on Nov. 24 to take over at Treasury in January, he withdrew from involvement "in monetary policy decisions, policy involving individual institutions, and day-to-day management" of the New York Fed. He had no role in disclosure decisions on counterparty payments, he said.

But Geithner's defense seemed only to provoke lawmakers, prompting several heated exchanges.

Geithner 'Takes Pride' in AIG Decisions

Mica said that the treasury secretary was distancing himself from a "cover-up," an assertion Geithner denied. Mica also criticized Geithner as offering "lame excuses."

"Either you were in charge and you did the wrong thing or you participated in the wrong thing," he said, later adding, "I think you're punting the blame and I think you're trying to position yourself as the savior."

"You don't know me very well," Geithner shot back.

Confronted with Mica's call for his removal, Geithner said he was proud of his work.

"I was there. I know what I was responsible for," he said. "I take full responsibility for and I take great pride in those judgments."

Other Republicans were no friendlier to Geithner.

Ranking committee Republican Rep. Darrell Issa and Rep. Dan Burton, R-Ind., joined Mica in expressing doubt that Geithner had no role in AIG disclosure decisions, while Rep. Michael Turner, R-Ohio, fired back at a statement by Geithner that he had never been a politician.

"You are absolutely a politician!" Turner declared.

Democrats also lambasted the Treasury Secretary.

"You had every opportunity – every opportunity! – to weigh in on behalf of the American people and make them take a new deal," Lynch said of the government's decision to pay the counterparties full value for credit-default swaps. "That is just unacceptable. You had the opportunity. I just think it was a terrible decision on your part."

"It just stinks to high heaven what happened here!" Lynch said. "The disclosure was not there. That was inexcusable and it makes me doubt your commitment to the American people."

Taxpayer Payback?

What sort of payback taxpayers will see as a result of the AIG bailout remains a bone of contention between lawmakers and the Treasury.

Issa called the rescue "a backdoor bailout" that likely won't return all the taxpayers' money.

"It's clear that the money paid and it being kept secret may ultimately cause the American people never to be repaid these dollars," he said.

But Geithner today defended the counterparty payments and the government's failure to secure haircuts from AIG's trading partners. With AIG's prospect of failure "imminent," the government couldn't engage "in protracted negotiations" he said.

"If we had tried to force counterparties to accept less than they were legally entitled to, market participants would have lost confidence in AIG, leading to the company's collapse," he said. "The counterparties could have refused, they could have kept the billions in collateral they had already taken, they could have kept the billions in securities they already had, and they could have sued AIG for breach of contract."

The government, he said, "did not have the luxury of time."

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