A devastating report in The New York Times documents how Timothy Geithner’s New York Fed worked tirelessly to make sure that AIG was forced to pay banks such as Goldman Sachs 100 percent on dubious contracts that might otherwise have been slashed or subjected to lawsuits. For his efforts, Geithner was promoted to run the rest of the nation’s economy.
The article is full of revelations that would be mind-numbing if we weren’t so used to reading about how taxpayers have been fleeced in the meltdown.
At one point, a regulator sends Goldman’s CEO an e-mail thanking the bank for its patience. The Treasury Department’s point man for the AIG bailout, a former Goldman executive, still held Goldman stock when working out the deal, reports the Times.
AIG itself was forced to sign a waiver giving up the right to sue banks over suspect contracts.
You don’t have to be a conspiracy theorist to follow the money: In the $182 billion bailout of AIG, Goldman Sachs and other banks that helped cause the financial crisis made out like, well, bandits. —PZS
New York Times:
In that regard, the newly released Congressional documents show New York Fed officials deferring to bank executives at a time when the government was pumping hundreds of billions of taxpayer dollars into the financial system to rescue bankers from their own mistakes. While Wall Street deal-making is famously hard-nosed with participants fighting for every penny, during the A.I.G. bailout regulators negotiated with the banks in an almost conciliatory fashion.
On Nov. 6, 2008, for instance, after a New York Fed official spoke with Lloyd C. Blankfein, Goldman’s chief executive, about the Fed’s A.I.G. plans, the official noted in an e-mail message to Mr. Blankfein that he appreciated the Wall Street titan’s patience. “Thanks for understanding,” the regulator said.
Photo illustration from White House photo by Pete Souza