Tim Geithner and Goldman Sachs are in the hot seat at a Congressional hearing today, and abounding conspiracy theories aren't about to let either off the hook.
Geithner has been hauled before Congress to explain his role in the controversial saga involving AIG and Goldman, whereby billions of taxpayer dollars from the bailout of AIG were funneled to big banks. When the government rescued AIG, it ended up paying the insurer's counterparties $62 billion to tear up troubled insurance contracts.
In his testimony, Geithner said he was removed from those decisions and had nothing to do with the deals that were ultimately made. He mentioned repeatedly that had the government allowed AIG to fail, the entire financial system would have crumbled.
The House Committee on Oversight and Government has subpoenaed more than 250,000 pages of internal documents on AIG -- including the much-discussed e-mails sent between New York Fed members.
In today's hearing, members of Congress were troubled by Goldman's receiving $2.5 billion in the wake of the bailout, and wanted to know why banks did not make concessions by returning collateral to AIG or devaluing the contracts.
One of the feistiest players today was John Mica (R-Florida), who told Geithner: "I believe either you made a bad decision there, or there was the attempt to cover up one of the biggest bailouts, backdoor bailouts, in history. Now, you've tried to frame it as you did it in the interest of the people and the failure of the system, I'm telling you, these are lame excuses. You were in the charge and did the wrong thing, or participated in the wrong thing."
In case Geithner didn't get the message, Mica added: "Why shouldn't we ask for your resignation as secretary of the Treasury?"
To his credit, Geithner kept calm. "That is your right, to that opinion. I have worked in public service all my life. I have never been a politician."
Later, a member of Congress told him that based on his answers, Geithner was in fact a politician, but we're not sure who that's meant to insult, because the person who said it is also a politician. Oh, what a tangled web.
Write to Julie Steinberg