Fresh calls for Treasury Secretary Tim Geithner's resignation are emerging following a new Bloomberg report. At the peak of the financial meltdown, the Geithner-led New York Fed instructed bailed-out insurance giant AIG to "to withhold details from the public" about the insurer's payments to banks. Those details included AIG's agreement to repay a number of banks $62.1 billion in toxic assets, a move many have criticized as "backdoor bailouts." Why did the New York Fed want to hide the details? Speaking for the skeptics, Reuters's Felix Salmon says we can only "assume the worst." Here's how other finance bloggers are parsing the new story:
- Now It All Makes Sense, writes Ed Morrissey at Hot Air: "Geithner and his cohorts wanted to make sure they covered their tracks while using AIG as both a whipping post and a money-laundering device in order to effect the rescue of politically-connected private institutions."
- Geithner Kept AIG Quiet to Advance His Career, suggests Felix Salmon at Reuters: "All of this secrecy coincided with Geithner’s nomination to be Treasury secretary, which makes the whole thing stink much more: was Geithner deliberately trying to keep anything potentially damaging secret for the sake of his own personal career progression?"
- A Major Blow to Transparency, writes Michael Corkery at The Wall Street Journal: "These emails raise a far more serious and fundamental issue: The government hiding material financial information from the public. Disclosure is the bedrock of good government and market investing. Both seem compromised in the AIG bailout."
- Geithner Must Go, writes Edward Harrison at Credit Writedowns: "He was on the job when these firms levered up and took reckless risks that endangered our financial system. For him to absolve himself of responsibility is a disgrace. And to add insult to injury, we now learn that he urged a systemically important company to withhold evidence of his looting of taxpayers. Tim Geithner must go."
- Give Tim a Break, writes a sarcastic Jessica Pressler at New York Magazine: "To be fair, you can kind of see his reasoning. Allowing banks like Goldman Sachs and Société Générale to cash out their insurance in comatose insurance company AIG for 100 cents on the dollar, the $62.1 billion tab of which would ultimately be paid by the taxpayer, without even trying to get them to take a haircut — well, that just looked so bad. Like Anthony Marshall–forging-his-mother's-signature-on-her-will bad."