(Hearing begins at 10 am...click video player to see live coverage)
The House Oversight and Government Reform Committee holds a hearing titled "Factors Affecting Efforts to Limit Payments to AIG Counterparties" to examine the collapse and federal rescue of AIG, in particular the compensation of AIG credit default swap counterparties.
Witnesses:
Panel One -- Timothy F. Geithner, secretary of the Treasury, and former president, Federal Reserve Bank of New York (FRBNY)
Panel Two -- Henry Paulson, former secretary of the Treasury
Panel Three -- Thomas C. Baxter, executive vice president and general counsel, FRBNY -- Neil Barofsky, special inspector general, Troubled Asset Relief Program -- Elias Habayeb, former senior vice president and chief financial officer, Financial Services Division, AIG -- Stephen Friedman, former chairman, FRBNY, and current member, Board of Directors, Goldman Sachs
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We'll do some live blogging of the hearings, though they last all day and we likely will not...
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Edolphus Towns: Opening statement...the NY Fed is made up of some very bad people...even the American people get it...why did you pay PAR?...shouldn't be any more BAILOUTS...it makes voters angry...we need genuine reform otherwise it's all going to happen again...
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Darrell Issa: Opening statement...submits schedule A into the record...8 letters sent to Geithner THAT WERE NEVER RESPONDED to, shall be added to the record...NY FED pressured AIG to abort negotiations with counterparties...should the American people have to wait until 2018 to get all the details...this was a backdoor bailout for WALL STREET...
Many facts we know, others are still unknown...Geithner has asserted 'complete ignorance' of the decision to pay AIG counterparties at PAR...HE accused TURBO of having made the decision and then covering it up...
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Tim Geithner: Opening statement..."I'm almost eating it...my microphone...the decision to bail AIG was the single most difficult decision I've ever made as a regulator...and it was an awesome decision...if we hadn't done so, the world would have imploded...(bullshit)....the world was collapsing...AIG was a much greater threat than Lehman...AIG should have never been allowed to take these massive financial risks...the NY FED had no authority to restrict AIG...we couldn't sieze it...the rules didn't allow it...no way to draw a line around AIG and protect everyone else...
The NY FED was the only 'fire station' open...we extended AIG a loan...it worked for awhile...we had to bail them again...they needed capital not just a line of credit...we could not negotiate...we did not have the authority...it wasn't our fault...we had to prevent broader damage...
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Edolphus Towns: Were you involved in the decisions to hide AIG counterparty payments? (Geithner responds 'Hell no, sir')....why did you recuse yourself from AIG decisions?...(Geithner: I was pretty damn busy with Obama's economic plan...)
Paul Kanjorski: Martial law...blood in the streets...Constitution would have been usurped...you saved the world Mr. Geithner and we love you for it...Kanjorski is an apologist tool...
John Mica: You took credit for the bailout, just not the cover-up...these are lame excuses...you gave 'lame excuses' about not paying your taxes months ago, and you're giving 'lame excuses' now...you are punting the blame...(Geithner: "you don't know me")...Mica is destroying him...you were either incompetent or you tried to cover it up...he's basically mocking him to Turbo's face...awesome...
George Voinivich: Brings up Goldman Sachs...this is getting good...
Steven Lynch: Goes nuts about Goldman Sachs getting 100 cents on the dollar...he's blasting away...you chose not to use your leverage...why, mr. geithner...why?
Marcy Kaptur: Let's hope Marcy is on her game...they are debating whether as head of the NY FED, he was public or private employee...she goes after him about his assistant being a former Goldman Sachs employee...very funny moment...she inserts Geithner's phone logs...then points out Paulson was CEO of Goldman...she brings up Dan Jester...asks Geithner where he worked...the answer, Goldman Sachs...
When does Paulson start?
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Commentary below is from James H...
Timmy's being asked what he knew and when he knew it viz. what "his staff" knew. He's pretending not to understand the question and stuttering for time.
Oh shit, he's talking "judgment" and "integrity" again. What judgment? What integrity?
This is ludicrous. I think he believes his own fantasies about his own greatness.
Connolly (D-VA) asks a softball. Geithner drones about "law of the land". My foot.
Fortenberry (Nebraska) asks why the secrecy over AIG counterparties in the first place? Geithner says, Have you not been here the whole time, did you not hear me? The sky would have fallen and the air would have melted and .....blah blah blah.
Would have been "catastrophic" if we didn't pay out at 100%. No option to default, no option for selective haircuts. Blanket assertions that go unchallenged by whatever milquetoast asked the question.
Jason Chaffetz mentions the 18 phone calls you made to Rahm Emmanuel, but "we'll talk about that later."
Now Chaffetz is calling bullshit on the Treasury's "profits" from the bailouts. NICE.
What are you counting as profits -- are you including all the losses and cash paid out through AIG? Geithner is bullshitting.
STOP HIM, CHAFFETZ, STOP HIM.
(he doesn't)
Now Geithner is pretending that the 10-year bank tax will make us whole.
So, neither Paulson nor Geithner claims responsibility for the AIG counterparty bailout. (Well, who IS responsible? Steve Friedman?)
Paulson is giving 3 reasons why we had to save AIG
1. It's Big. (Duh, thanks Lurch) Now he's lying about how it threatened the insurance units. Bull shit. Learn some BK law, Paulson.
2. No one knew anything about AIG and how it was structured (mmmm kay, so.... how did you know it was "systemic"?)
3. (I missed the third reason, but I don't think it really was one)
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NICE. Towns asks Paulson why he didn't call his friends on Wall St. and ask for a haircut on the AIG bailout.
Paulson says , uhhhhh I had no involvement in that., uhhhhh the Federal Reserve did it.....
Towns asks again, why did you sit on the sidelines on this issue, WTF?
Paulson won't answer, tries to dodge. Says, uhhhh it was a Federal Reserve loan... and I have great confidence in their integrity... blah blah blah
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Towns simply asks, why not let AIG go into BK? Why?
Paulson gives usual answer -- world would have ended, the sky fallen, the earth melted in a storm of hellfire and brimstone....
But NO specifics, no mechanisms, no chain of causality. Just abstractions and adjectives.
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Blaine Leutkemeyer (R-Missouri) just asks why AIG FP, which is a part of the holding company, not the insurance businesses, had to be saved in order to save the insurance businesses.
Paulson says uhhh..... let me tell you.....uh .... this company was big....uhhh
Leutkemeyer says BULLSHIT, but nice try Hank. The insurance units would have been protected, that's a fact.
AWESOME!
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