Geithner faces demand for AIG records

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Geithner faces demand for AIG records

By Tom Braithwaite in Washington

Published: January 14 2010 00:26 | Last updated: January 14 2010 00:26

The House oversight committee has submitted a legal demand for any phone records and e-mails from Tim Geithner that discuss payments from the New York Federal Reserve to AIG's counterparties.

Republicans on the committee are attempting to link the Treasury secretary to the bail-out of AIG's counterparties – a list headed by Société Générale and Goldman Sachs – which were made while Mr Geithner was president of the New York Fed.
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The Treasury has said Mr Geithner recused himself from the case ahead of a move to the top economic job in the new Obama administration. The New York Fed has emphasised that Mr Geithner played no part in a decision not to disclose details about the AIG payments.

In 2008, with AIG under threat of collapse because of demands from counterparties that the insurance group pay increasing amounts of cash collateral on credit default swaps, the New York Fed stepped into avert what it believed could be an event that threatened the financial system.

But its decision to pay $27.1bn to 16 institutions has been subject to scrutiny ever since, with both Democrats and Republicans asking why the New York Fed did not demand a discount from the banks and whether it improperly asked AIG to withhold details about the deal from the Securities and Ex-change Commission.

Edolphus Towns, the Democratic chairman of the committee, has asked the Treasury secretary to attend a hearing in spite of the administration's protestations that he was not involved. The Treasury has not yet confirmed that Mr Geithner will attend.

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