And It’s Dodd Who Was In Bed With AIG?
Easily the most curious aspect of the AIG bonus scandal that captivated the country last March was that Sen. Chris Dodd (D-Conn.), who’d proposed to stop payment of those bonuses, took the fall when Treasury officials, behind Secretary Tim Geithner, swept onto the scene and altered Dodd’s proposal to allow the bonuses to proceed. (Geithner admitted as much a few weeks later.)
Yesterday, we learned just how entrenched Geithner, head of the New York Federal Reserve before taking the Treasury spot, was with AIG. Even after the federal government had rushed in with $180 billion to bail out the beleaguered insurance colossus, the New York Fed was telling AIG executives to keep mum about tens of billions of dollars in payments it was making to other Wall Street giants, according to emails obtained by Bloomberg News Thursday. And although the official line from Treasury this week is that Geithner “played no role” in that episode because, as Treasury nominee, he had recused himself from Fed activities, it’s difficult to imagine a scenario under which he, having headed the Fed for five years, wouldn’t have had a hand in decisions surrounding the largest federal intervention in Wall Street since the Great Depression.
None of this, of course, should come as any surprise. Geithner’s close relationship with Wall Street has been a mark on the Obama administration since the nomination 14 months ago. Of course, that relationship was also the very reason that President Obama chose Geithner to begin with. Remember what stocks did the day news of that nomination leaked?