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How Tim Geithner Screwed the American Taxpayer

By Larry Doyle on January 8, 2010 at 8:30 AM in AIG, Bailouts, Current Affairs, Economy, Sense on Cents (Larry Doyle blog), Tim Geithner, U.S. Treasury, treasury department

Tim Geithner blinked and screwed the American taxpayer out of billions of dollars in the process. How so?

Geithner and his cronies in Washington have misrepresented–if not outright lied–about the payments to both domestic and foreign banks in settling exposures to then failing AIG. While politicians and pundits alike will reference the precarious nature of the time and heat of the moment to defend Geithner and his cronies, the simple fact is the settlement of the AIG swaps at 100 cents on the dollar was nothing short of one of the greatest heists in our country’s history.

This heist transferred multiple billions of dollars from the American taxpayer to the likes of Goldman Sachs, JP Morgan, Societe Generale, and many more domestic and foreign banks as well.

At that very point, Wall Street knew it had Tim Geithner over a barrel and has owned him ever since. As much as Geithner may try to play the populist card, the power brokers on Wall Street know all too well that at the point of the gun, Geithner blinked.

Who deserves credit for exposing this corner of the Wall Street-Washington incest? Rep. Darrell Issa (R-CA). As Bloomberg highlights this morning, Geithner’s New York Fed told AIG to Limit Swaps Disclosure:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

Why couldn’t Geithner demand that Goldman take 60 cents on the dollar? Geithner admittedly knew the system needed funds and expediently transferred these funds at 100 cents on the dollar. That said, the precedent Geithner set proves that Wall Street has always and still now owns Washington. Lloyd Blankfein, who was in the room with Geithner and Paulson at the time, is a much better poker player and trader than Tim Geithner. Blankfein trumped Geithner at that point and at each and every hand since then.

America deserves so much better.

Doc99

Our country’s in the very best of hands.
connie

This is so sad. Crooks, crooks and more crooks. They will take the american taxpayer to jail if he accidently screws up his taxes while these guys get away with the outright theft from us. What has happened to this country? It’s not just the democrats that have gotten into this mess the republicans are in it as well.
Always Learning

How much did Obama know . . . and when did he know it?
Peggy Sue

The banksters, who created the problem, are made whole while the American taxpayer gets shafted.

And these people wonder why the American public is becoming increasingly incensed? Geithner, Summers and Bernake need to go. They are just more of the same, toxic assets.
Texas Playwright

This is criminal, and anti-American. How many of us are struggling to keep a job, subsist on a part-time job, look for a job while Congress, Wall Street and this amoral cabal of thieves in OUR WH attempt to destroy our country? Vultures in every evil regime are just waiting for us.

I hope the America Rising video goes viral. For those video genises out there, PLEASE make a video showing this banking/Wall Street corruption in a clear, simple, VISCERAL way that all of America understands.
jbjd

PS, you wrote, “Geithner, Summers and Bernake need to go.” But you should have finished the sentence with “to jail.”
Jackie S.

WHat else should we expect with entrenched politicians who have no desire to respond to the people the alledgedly represent. Remember we are not smart or sophisticated enough to comprehend the intricacies of the world. THey the Hobbsian Democrats and Progressive Republicans know what is better for us.

Pat Pat Pat…go watch football and wring your hands about Tiger’s impending divorce-or who is sleeping with whom in hollyweed. Don’t keep your eye on your savings or what we’re doinf in DC…nothing to see here move along.
Peggy Sue

You’re right, jbjd. Geithner, Summers and Bernake should be sharing a cell with Bernie Madoff, the Ponzi Club.
lark

misrepresented–if not outright lied…. I want to know LD since when misrepresentation is not lying? But first thank you for exposing this way of taking over of the country’s wealth for their personal gain.

Well, no wonder that the banks don’t need to let go that foreclosed house at any price. No Sirie. Lets hold it, just mow the lawn, and have our appraisers appraise it at market value even though it is delapidated like a lettuce box because of our famous shoddy construction methods.

The thousands of counties around the country are grateful though. Their property tax rolls are still generating good revenue to pay for county services [service people counting clouds] and county commissioners heafty salaries. And thousands of school boards around the country are grateful too. They can still build that spiffy super highshool where kids will go to listen to their CD players.

In the mean time the false economy keeps itself alive, unlike the economies of Russia and other countries who have to deal with reality.

But don’t dispair. China is not stupid. No Sirie. They know what they are doing and when they are going to strig our necks.
lark

[service people counting clouds] I meant to say, riding all over the county on Fords F-150s, Ford Touro’ses and Mini-vans.
lark

If we think the Chinese are stupid we are in for the surprise of our lives.
elizabethrc

So what’s going to happen to Geithner, et al? Nothing. Not a damned thing. He’ll probably, at some point, resign “to spend more time with his family” and then move on to an even more cushy lobbying slot.
And just where is all of OUR money? Not to be seen and probably never to be seen again by us. Remember us? We’re the taxpayers. You know, the ones who are irrelevant and who can be found at the bottom of the totum pole.
I have absolutely zero faith in this country. I was born here, raised here and for the first time in my life, I am ashamed of my country.
Oh well, I guess it’s time for another commission to be appointed to look into the matter. More millions of dollars and many months of so called investigation. At the end? Nothing. absolutely nothing will be done or changed.
lark

Think about this, just this little biddy fact. We have to pay the Chinese interest or “Investors” – that is bond purchasers for the house the bank is holding and not letting go until someone offers the market rate. He he. Then to fix the house we have to buy stuff made in China. He he.

And if you expect to pay China with fresh paper just printed from the Treasury – yes the Chinese are going to take it by the truck loads – yeah right. Expect to pay 1 dollar for a banana soon.
lark

Do you know Larry Doyle that the wonderful exiting super patriotic American entrepreneurs featured proudly by the Obama campaign during the election and that were given wonderful tax breaks and grants by the states and counties are now outsourcing jobs to China because they cannot be competitive manufacturing the entire process in the U.S.?

So, yeah, alternative energy my foot. It also goes to China.
Doc99

Please read – Fan and Fred: Frauds By Design.
http://pajamasmedia.com/blog/fan-and-fred-frauds-by-design/

Fredron indeed.
lark

Do you know Larry Doyle that the wonderful exiting super patriotic American entrepreneurial solar panels manufacturers featured proudly by the Obama campaign during the election and that were given wonderful tax breaks and grants by the states and counties are now outsourcing jobs to China because they cannot be competitive manufacturing the entire process in the U.S.?

So, yeah, alternative energy my foot. It also goes to China.
lark

Look that is beyond the pale. And it is not the corruption per se that stinks putrid cowardice, it is our own willingness to pay for it even if it takes us down the road of loosing our own dignity.

All of these things are done to protect the counties and the school boards so that they do not have to contract and reduce their payroll in sync with the real economy. They just want to make sure the County Property Appraisal can keep stating that your house market value is 150 thousand, 250, 350, and so on and not 36 thousand, 46 thousand and 86 thousand and so on.
Anonymous

I want to know LD since when misrepresentation is not lying?

It’s when a politician and or wealthy person does it!

George Orwell tried to tell us.
Animal Control

I want to know LD since when misrepresentation is not lying?

It’s when a politician and or wealthy person does it!

George Orwell tried to tell us.
oowawa

“How much did Obama know . . . and when did he know it?”
Always Learning

LOL, oowawa!!
oowawa

HaHa, jbjd. Yep, they “need to go” to jail, but unfortunately they have already rounded “Go” and collected $200, er, $200,000,000,000 or so (in fact the money trays are empty and full of IOU’s). They and their GoldmanSachs pals seem to be living the high life on Park Place and Broadway; wish they would all be forced to spend a few years slumming on Baltic and Mediterranean with the rest of us low-lifes.
oowawa

Reminds me of Sir John Harrington’s famous lines:

“Treason doth never prosper: what ’s the reason?
Why, if it prosper, none dare call it treason.”
Anonymous

Doyle you are a true monday morning quarterback. Are you sure you use to work on Wall Street?

At the time of the AIG bail-out, which by the way was really under Paulson, we were in uncharted waters. We were within hours of a complete financial market meltdown. After Lehman completely blew up the market, AIG appeared to be next. Then Morgan Stanley, Goldman, etc. etc. were all very close to collapsing. The domino effect was close. It is inconceivable what would have happened if such a large firms as AIG went down and did not fullfill its obligations. Now it is easy to say that better control should been put on what AIG did with the money, but the most important thing was that it met its financial obligations and keep the rest of the financial community from going down. How exactly do you propose that AIG would have only made partial payment on its obiligations, particularly given the short period of time to act and how would you have assert the pay-outs, legal issues, and fair value for the thousands if not millions of transactions the AIG was involved with?

Easy to be monday morning quarter back, but there were many involved here, mostly Republicans, and hardly anyone had any good choices or real incite. In addition, it is not as if AIG was giving free money to those on the other side of the transactions, as this is what they were actually owed.
Larry Doyle

Guest,

Monday morning QB? What?

I have been way in front of a whole host of travesties from FINRA to housing to Freddie and Fannie over the last 15 months.

If Timmy boy wanted to pay the creditors 100 cents on the dollar then why did he have AIG cross the language out? why didn’t he have the balls to stand there in the pocket and level with the public instead of lying over the last year.

AIG could have been saved with sufficeint capital injected without paying 100 cents on the dollar.
Sonic Ninja Kitty

Whoa–hello there Henry Paulson, banking apologista supremo!
Sonic Ninja Kitty

Whoa–is that you, Henry Paulson? You are a banking apologista supremo! Fear is a coward’s weapon.
elaine

Now comes the best part: Turbo Tim would like folks to convert their 401k’s to annuities managed by AIG..LOL…this is no joke I just read it on Bloomberg. It just keeps getting better & better.