What was set to be a testy Capitol Hill hearing for US Treasury Secretary Tim Geithner over the bailout of insurance giant American International Group turned out to be a steel-cage slugfest.
Geithner faced some of the most excoriating criticism of his career yesterday, with politicians from both parties slamming his performance.
But there were no indications that Geithner would actually lose his post, although the issue was raised during a heated exchange.
“You had every opportunity — every opportunity — to weigh in on behalf of the American people and make these people [Wall Streeters] take a new deal and make them take a haircut,” bellowed Rep. Stephen F. Lynch, (D.-Mass.), who at times turned red-faced as he laid into the Treasury secretary.
“You scalped the folks on Bear Stearns — two cents on the dollar they got! The folks at Goldman Sachs got 100 cents on the dollar and that is totally unacceptable,” the representative continued.
Geithner spent much of the morning battling accusations that as president of the New York Federal Reserve he worked in favor of big banks in negotiating terms for the AIG deal.
“We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses,” Geithner said.
At issue was the ex-NY Fed boss’ involvement in some $62 billion that the government doled out to struggling AIG in 2008. The money eventually went to firms like Goldman and Deutsche Bank, to settle so-called counter-party insurance contracts at 100 cents on the dollar — too high a value, critics say.
Geithner reiterated that he recused himself from dealings with AIG on Nov. 24, 2008 in order to accept the nomination for the Treasury post.
The pounding he received from lawmakers was so fierce that, at one point, officials pleaded for more time just to continue the lambasting, including Rep. John Mica (R.-Fla.) who said Geithner should resign.
“You gave lame excuses then, and you’re giving lame excuses now,” he charged.