Geithner says he did right on AIG

US Treasury Secretary Timothy Geithner denied any role in disclosures about American International Group’s (AIG) payments to banks and defended his decisions as New York Federal Reserve chief to pay full price to retire AIG credit default swaps.

Geithner, in a prepared testimony for a congressional hearing yesterday, said demands for concessions from banks in late 2008 could have triggered devastating credit rating downgrades and brought AIG down, with “catastrophic” consequences for the US economy.

Geithner’s testimony is widely seen as important for his future as Treasury chief. He has denied acting in the interests of specific institutions. “I had no role in making decisions regarding what to disclose about the specific financial terms of Maiden Lane II and Maiden Lane III and payments to AIG counterparties,” Geithner said, referring to Fed investment vehicles that bought securities from the banks.

Geithner, who ran the New York Fed at the time of the bailout, faces a grilling by the US House of Representatives Oversight and Government Reform Committee, which is reexamining AIG’s payment of $62.1 billion (Dh228bn) to bank counterparties to close out trades made before and after the insurer was rescued.

 

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