"Secretary Geithner played no role in these decisions," Meg Reilly, a Treasury spokeswoman, said in an e-mail. "He was recused from working on issues involving specific companies, including AIG," after his nomination for Treasury secretary on Nov. 24, 2008. Geithner "began to insulate himself weeks earlier in anticipation of his nomination," she said in a separate statement.
So says Ms. Reilly. and was that 1.1 weeks or 1.2 weeks?
It is excellent timing then. The earliest email mentioned in the Bloomberg article is November 24th. Whew...But wait...
The Huffington Post provided access to the emails in question and they tell a more thorough story.
There's this from AIG counsel Kathleen Shannon -
VVewill get you drafts as soon as possible over the weekend for the ones tied to events next week. Please let us know...
"Kelly., <Reede"Trevino.Future Form 8-KsInthe interest of getting ahead of the curve, these are the Form 8-Ks <br>cc
11/21/2008
0506 PMToSarah.Dahlgre
Kathleen Shannon ••••••••
----- Forwarded by Sarah Dahigren/NY/FRS-----"
That was from AIG counsel on November 21st, presumably in response to the NY FED's request. There is a heavily edited letter at the site that shows handwritten corrections that limit damaging information about how the deal was being structured. Those were copied and sent Nov. 23. Geithner wasn't recused at that time.
Ms. Reilly's language is grey at best. She says Geithner wasn't involved in the decision, but that doesn't mean he wasn't aware. Everyone else seemed to be at the Fed. It seems like more of the willful blindness intended to let Geithner be appointed with as little fuss as possible. Can you imagine the uproar if we'd known November 2008 that Goldman Sachs was getting paid out at 100%. Remember the uproar over $160 million bonuses? Imagine the $13 billion Goldman payout at the height of the crisis. Geithner knew it was wrong. That's why he circulated a term sheet leaving room for negotiating...
Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department(Hank Paulson) and Chairman Ben S. Bernanke’s Federal Reserve. Geithner’s team circulated a draft term sheet outlining how the New York Fed wanted to deal with the swaps -- insurance-like contracts that backed soured collateralized-debt obligations...
Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.
Geithner knew what he was doing was wrong. He did it anyway. He crossed out a line and put us on the line for tens of billions of dollars. The only other precedent for paying out at such high percentages is Freddie and Fannie who paid out at 90+% on the taxpayers dime.
And how is it, that Geithner, the man so uniquely qualified, that our wise leaders in Washington declared him the only man fit for the job, "insulated" himself from dealing with a $25 billion deal at the epicenter of the economic mass destruction of the moment.
Because the deal was done and he knew it was dirty. The NY Fed knew it was dirty and it would have killed his confirmation. They didn't have to be told by Tim Geithner, to kill any embarrassing disclosures anymore than they had to be told to look the other way for the previous eight years as our Banking system rotted one mortgage loan and default swap at a time.
Meg Reilly went on to say:
"In the transaction at the heart of this dispute... the FRBNY made a loan of $25 billion which is on track to be paid back in full with interest so that taxpayers will be made whole. Somehow that fact that the government's loan is 'above water' gets lost in all the consternation
That isn't the point, Ms. Reilly.
First of all, that loan is being paid back by the value of the CDO's the Fed holds in an account. Far be it from a novice like me to place a value on CDO's, but, judging by the changes in accounting standards and the Fed's disdain for honest and complete disclosure and fair dealing on behalf of ALL Americans, I'm not holding my breath. What you deem "above water" another may label "swamp scum".
And the point is, that Geithner's NY Fed directed AIG to provide incomplete regulatory filings and withhold information at a time that coincided with Tim Geithner's nomination and confirmation to Secretary of the Treasury.