Saturday, March 21, 2009

The Smoking Gun Points To Geithner

by Earl Ofari Hutchinson

On March 19, Treasury Secretary Timothy Geithner was bluntly asked by a CNN interviewer: "As far as you can remember, though, you did not know about this (the tainted AIG bonuses) before March 10th?"

Geithner answered: "On Tuesday, I was informed about the full scale and scope of these specific bonus problems. And again, as soon as I did -- but, you know, it's my responsibility, I was in a position where I didn't know about those sooner, I take full responsibility for that."

This is the official Geithner and Obama administration line. But it's just that -- a line. It's not the truth. The truth is that Geithner knew everything he needed to know about the AIG bonuses long before March 10, did nothing about them, and then feigned outrage when the truth came out. Here's the smoking gun proof.

September 2008. AIG officials made no effort to mask their intent to pay the tainted bonuses. They clearly spelled out in their required SEC financial filing that they would pay $469 million in "retention payments" to keep valued employees.

November 2008. Treasury and Fed officials negotiated the specific terms under which the bonuses could be paid. This even included cuts in bonuses for most of the AIG's top executives.

December 2008. Congressional Democrats attempted to hold hearings on the bonuses. Several House Democratic Reps went further. South Carolina House Rep Elijah Cummings specifically demanded that newly appointed AIG CEO Edward Liddy scale back the bonuses. Another House rep. publicly called for the resignation of Liddy.

February 2009. Geithner and top Obama team economic advisor Larry Summers pressure Connecticut Senator Christopher Dodd and other Senate lawmakers to excise a provision from the banking bailout legislation that bans excessive executive bonuses to executives at TARP funded companies before February 11.

February 2009. Treasury staffers publicly disclose that the Treasury, the Federal Reserve in Washington, and the New York Federal Reserve held continuous interagency discussions on all operations of AIG since September. Geithner headed the New York Fed during those months.

February 2009. New York Fed officials reiterated that they carried out direct oversight of AIG and that they knew all about the bonus payments.

March 3, 2009. In an open hearing before the House Ways and Means Committee, Geithner complains to New York Rep Joseph Crowley that executive bonuses have gotten out of "whack." He was referring specifically to the tainted AIG bonuses.

March 18, 2009. A Treasury spokesperson insists that Geithner did not know about the timing of the AIG bonuses. That's far different than saying that he did not know about them at all as Geithner insisted, and apparently continues to insist despite the smoking gun proof to the contrary..

Unfortunately, this also appears to be President Obama's position as well. He has stoutly defended Geithner. The question is how long will and should he continue to defend him in the face of the smoking gun proof of what Geithner knew about AIG and when he knew it.

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