Oversight and Government Reform Chairman Edolphus Towns (D-N.Y.) announced Friday that he is calling Treasury Secretary Timothy Geithner to testify this month on his role in advising American International Group to withhold key details from the public about its use of federal bailout dollars.
E-mails that surfaced this week indicate that the New York Federal Reserve Bank, which was run by Geithner from 2003 to 2008, pressed AIG to avoid disclosing details to the public about the terms of the insurer’s bailout on credit default swaps, a decision that may have cost taxpayers billions of dollars.
“More than one year after the first federal bailout of AIG, the American people continue to question where their tax dollars were really sent when the government rescued this company. I continue to believe that a comprehensive review of the rise and fall of AIG — and the involvement of counterparties — can provide a useful vehicle to understanding how inadequate regulations, cheap money, risky business deals, and in some instances, corruption led to the current economic crisis,— Towns said in a statement.
Towns is planning a hearing the week of Jan. 18 and, in addition to Geithner, is calling Thomas Baxter to testify. Baxter has served as general counsel and executive vice president of the legal group at the New York Fed since 1995.
Financial Services Chairman Barney Frank (D-Mass.) has also voiced support for hearings on AIG’s use of bailout dollars, although he has warned against making the matter only about Geithner.
“It is a mistake to have only Geithner and to not include other Bush administration appointees,— such as former Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, said Frank spokesman Steven Adamske.
To focus solely on Geithner is “a partisan shot for Republicans— to blame an Obama administration official, Adamske said.
Oversight and Government Reform ranking member Darrell Issa (R-Calif.) was delighted with the news of Geithner coming to testify.
“Both Republicans and Democrats on this committee have been waiting for more than a year to get answers from Secretary Geithner,— said Issa, who uncovered the e-mails released this week that detail exchanges between AIG and the New York Fed.
If Geithner or anyone else declines the invitation to appear before the committee, “they should be subpoenaed,— added Issa.