What Geithner Will Say in His Defense of the AIG Bailout?
The New York Federal Reserve and Treasury Secretary Tim Geithner may soon testify once again before the House Committee on Oversight and Government Reform over their handling of the collapse of AIG.
Specifically, the Fed's decision to use taxpayer money to make 100% whole $62.1 billion worth of trades made by counterparties with American International Group, (AIG), including Goldman Sachs (GS), Societe Generale and Merrill Lynch.
But there are curious disclosures in government documents that you will likely hear Geithner use in his defense, a defense he’s quietly made already without much ado in the media.
One disclosure: The government's definition of systemic risk took into account political fallout from not making whole foreign counterparties to AIG. In particular, France finance ministers had a heated reaction to not fully remunerating its companies, Societe Generale and Calyon.Full article