New York (CNNMoney.com) - Treasury Secretary Timothy Geithner told lawmakers Wednesday that he had no involvement in an apparent attempt by government regulators to withhold crucial information about AIG's bailout from the public.
"I had no role in making decisions regarding what to disclose," Geithner testified at a hearing held by the House Oversight Committee Wednesday.
New York Fed officials instructed AIG not to disclose more than a dozen controversial transactions to the Securities and Exchange Commission in November 2008. At the time, Geithner was the president of the New York Fed but he said he had recused himself from the day-to-day operations at that time because of his nomination to be Treasury secretary.
At least two lawmakers weren't buying Geithner's denial.
"He has asserted complete ignorance of the Fed's efforts to cover up the bailout details," said Committee Ranking Member Darrell Issa, R-Calif. "Many Americans, including members of this Committee, have a hard time believing that Secretary Geithner entered an absolute cone of silence on the day that his nomination was announced."
Another Republican lawmaker, Rep. John Mica of Florida, also said he did not believe Geithner's testimony and called for his head.
"Why shouldn't we ask for your resignation?" Mica asked Geithner. "We're not getting the whole story, we're getting the blame story. You're either incompetent on the job or you knew what was taking place and you tried to conceal it, and I think that's grounds for your review."
Geithner angrily responded to Mica, "You don't know me very well." He then more calmly said, "That is your right to have that opinion. I have served my country as carefully and ably as I can."
AIG's bailout has incited furor among lawmakers and the public, as the troubled insurer has come to symbolize the corporate greed, risky behavior and lack of regulation that many believe caused the Great Recession.
The issue at hand on Wednesday was one of the most contentious: a decision by the New York Fed to pay counterparties 100 cents on the dollar for the underlying assets that AIG has insured through so-called credit default swap agreements. As a result, $62.1 billion of taxpayer and AIG funds were essentially funneled to 16 banks that were counterparties to AIG insurance contracts.
Committee Chairman Edolphus Towns, D-N.Y., called the facts of the case "murky."
"The circumstances surrounding the payments to the counterparties has created an air of suspicion and distrust among the American people, starting with the New York Fed's initial refusal to name the counterparties," Towns, D-N.Y., said at the hearing. "The New York Fed argued that disclosing the counterparties would somehow injure AIG. In fact, when the information was finally released under pressure from Congress, nothing happened."
Former Treasury Secretary Henry Paulson, Special Inspector General for the $700 billion bailout Neil Barofsky and the lead attorneys for the New York Fed and AIG are also slated to testify at Wednesday's hearing.
Federal Reserve Chairman Ben Bernanke, who is not testifying Wednesday, said in a letter that he was also not involved in any decision regarding disclosures.
In November, SigTARP Barofsky released an audit of the New York Fed's decision that found the regulator failed to use its clout to negotiate concessions from AIG's business partners.
The House Oversight Committee, subpoenaed the New York Fed for the documents Barofsky used in his audit and recently received 250,000 pages of e-mails and other correspondence. The documents reveal that the New York Fed had urged AIG not to make any reference in its SEC filing that the counterparties had received the dollar-for-dollar value.
Geithner defended his decision to offer full-value for the underlying assets on the credit default swaps. But regarding any decision not to disclose those transactions, Geithner argued that he had had no involvement because of his nomination as Treasury secretary.
"On Nov. 24, President-elect Barack Obama announced that he intended to nominate me to be Secretary of the Treasury," Geithner testified.
"Starting on Nov. 24, I withdrew from involvement in monetary policy decision, policies involving individual institutions, and day-to-day management of FRBNY."
One day later, on Nov. 25, the subpoenaed New York Fed documents show that AIG began to prepare its report with the SEC.
Despite his stated lack of involvement, Geithner was adamant that those who were involved "acted solely in the public's interest," adding that they were "never involved in any decision for any private benefit."
Due to many New York Fed employees' ties to Wall Street investment banks - including Geithner - many lawmakers and members of the public have implied that the regulator's decisions may have been made for personal gain.
"I think your commitment to Goldman Sachs trumped your commitment to the American people," said Rep. Steven Lynch, D-Mass.
and you didn't pay your taxes either..
Now the proven tax cheat (heading the IRS) is also now lying to congress.....thanks BHO, that is change we can believe in...and is exactly what I expected!
Wow – who exactly is surprised by this tax cheat lying?
Hmmm...Rep. Lynch might be right. Bush's pal Paulson should also be investigated. Bernake and Geitner gotta go. Why does GS always seem to have their executives at the right place at the right time, dictating U.S. policy with no accountability?
Geithner said he had no role and Nixon said he was no crook. Fact of the matter is that the damage is done. He can't prove he didn't and the Gov. doesn't seem to be able to prove he did. Makes no difference. The damage is done. No one trust him now so remove him and move on.
Besides, after the US defaults on all this debt and China forecloses on the US they will finish taking ownership of this country and these guys will straighten up and fly right because the Chinese put guys like all the big time CEO's in prison for the wrongs they have done and in some cases they execute them. That is a greater incentive to do right than the High Dollar Parachutes we give to guys caught with their "PANTS ON THE GROUND".
Why is it that no one in this Admin will take the blame for what they do, oh they will take all the glory, but never the blame. " IT WAS NOT ME"
Paulson, the ex-Goldman-Sacs, was at the wheel while Bush was ship`s captain. AIG bailout was orchestrated and implemented on THEIR watch, Geithner was just inherited the flack. ---- Where is Paulson, anyway !!!!!!! -– I`d bet as a "advisor" for one or more of the banks who received 100% of their exposure from AIG .
Nobody knows how to ruin a good thing like the Democrats. The decision may have been made in good faith, but they ought to have the political sense to know what it would look like.
Where is Obama's promised transparency? As a Democrat I am very upset that this is the best our party can come up with. If we don't start making improvements then we don't deserve to win.
Fire this bum.
He must have been "sick" that day
I assure you Col. Klink, I saw nothing, I know nothing!
This guy looks more and more like the arch-villain in a Batman movie.
He's actually saying that he thinks the punitive Bank Tax won't be passed on to consumers....what a maroon.....and he's the Secretary of the Treasury?
Of course, Geithner was wayyyyy behind on his own taxes when appointed to this Treasury position (making him over the IRS!). Enough said! Now, whether he knew more than he is admitting at this point is yet to be seen. However, his statement that the improper non-disclosure was okay because it was not done for the profit of the individuals is suspicious–illegal non-disclosure is declared such because it is a fraud upon investors, not just because it improperly benefits board members.
yea, right, and I saw pigs flying this morning
Of course he didn't. Why even bother to waste the time and tax payer dollars to ask him?
You're either incompetent on the job or you knew what was taking place and you tried to conceal it, and I think that's grounds for your review. – Definitely hit the nail on the head on this one. I think a Jack Nicholson You Can't Handle The Truth was really the only credible response Geithner could have come up with.
ENOUGH SAID. You want to see why Geitner should not only be forced to resign but should also be put behind bars, read the book HOUSE OF CARDS. It will absolutely blow your mind. He is a crook and a profiteer to the tenth degree.
If I was geithner I would quit this job is not worth it I couldn't take this crap from a bunch of grandstanders this is all it is the money is already spent so what can they do about it nothing they should have voted against the bailout money and let them fall instead they yell like children.
don't point fingers at him . go after the liars at AIG and put everyone of them in prison it will send a message to the rest of these liars and bottom feeders . I am tired of bailing out the top few trash . go get these people just like ENRON I worked for ENRON as a journeyman millwright and got riped off just like many other people did . our government needs to get off there ass and help the president bring reform to business practices . if our representatives don't start doing something then they are just as guilty as the crooks that run big business . so the OVERSIGHT COMMITTEE is a joke and they should be investigated for not doing there job too . everyone of thses people that are pointing fingers are just as guilty . mud butt bottom feeders m :)
Yes Senator, Congressman. I did my taxes honestly and openly and I had nothing to do with this AIG scandal. I also have a nice tie and my haircut looks good, don't you think?
Yes he was only involved in the Goldmine Sachs cover-ups.
Just another disingenuous Republican dishonestly perpetrating an atmosphere of mistrust of the federal Government.
Lets us not forget that the economic near meltdown resulted from the corrupt Republican Policies of the previous administration and that administrations emergency efforts to help the banks did effectively pull our economy from the edge of a complete disaster.
Republicans machine continues to mislead the public into thinking something is unethical. Why? Because they are so use to being the party in power and they will say or doing anything to restore their once formable power.
The total absent supporting facts in the allegations against Secretary Geithner is a clear indication of just how corrupt Republicans have become and how little they care about Americans.
Nothing the Obama administration could do would be perfect or free from deserving any criticism, but something had to be done, and done fast and President Obama showed tremendous courage.
We need cooperation, new ideas and all of our politicians in Washington to support our President and his administration, not beat them down with every bit of energy the Republicans can muster with the dollars from Insurance industry.
'I had no role' in an AIG cover up......Sure you didn't Timmy Boy (dripping with sarcasm)
The People Deserve to know how and who stole out money!!
I AM NOT going to sit here and say he is lying . This just bring back memories with Dodd and AIG.
First story: I had no role
Second story: I had a role
Maybe this time there will be but one story. Who knows!