WASHINGTON — A House of Representatives committee chairman has invited Treasury Secretary Timothy Geithner to testify about why, immediately after he was nominated, federal regulators decided not to reveal the terms of $62 billion in taxpayer-financed payouts to major banks.
The White House, responding to the release of internal e-mails drawing Geithner into yet another controversy over the government's handling of the nation's financial crisis, reiterated President Obama's support for his treasury secretary. Asked whether Geithner still has Obama's full confidence, presidential press secretary Robert Gibbs said, "Of course."
The e-mails show that the Federal Reserve Bank of New York, which Geithner headed from 2003 to 2008, directed insurer American International Group for months to keep secret the terms of the payments to Goldman Sachs and other U.S. and European banks.
McClatchy Newspapers reported Thursday that lawyers for the New York Fed began to press AIG attorneys to maintain secrecy about the payouts on Nov. 24, 2008, hours after Geithner was nominated for his Cabinet post. AIG lawyers voiced their disagreement on several occasions over the ensuing months until the details of the payouts were made public last March.
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As a result of the delays, Geithner never had to face questions at his Senate confirmation hearings last January about the New York Fed's decision to pay the banks the full face value of insurance-like bets called credit-default swaps.
Democratic Rep. Edolphus Towns of New York, the chairman of the House Oversight and Government Reform Committee, said he'd hold a hearing the week of Jan. 18 to examine how $182 billion in taxpayers' dollars that rescued AIG was used.
Towns has invited Geithner and Thomas Baxter, the general counsel of the New York Fed, to testify, the committee said.
Asked whether Geithner would oblige, a Treasury Department spokeswoman declined to comment.