Geithner Swinging in Wind After Fed Drops AIG Ball

Treasury says Fed kept them in dark, despite sec's previous role
By Jason Farago,  Newser Staff
Posted Mar 19, 2009 8:35 AM CDT
President Barack Obama, followed by Treasury Secretary Timothy Geithner, arrives in the East Room of the White House in Washington, Monday, March 16, 2009.   (AP Photo/Gerald Herbert)
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(Newser) – Officials at the Fed knew about AIG's plan to award $165 million in bonuses for months but failed to tell the Obama administration, reports the Washington Post. Treasury Secretary Tim Geithner said this week he was "stunned when I learned how bad this was"—belatedly on March 10—and regretted not knowing earlier. But the communication failure raises questions about the relationship between the Fed and the Treasury as the two roll out rescue programs that could cost $2 trillion.

Last year Geithner, as president of the New York Fed, was instrumental in keeping AIG afloat and preventing a collapse of the financial system—leaving issues of compensation to other staff members. His position at the heart of the initial AIG rescue has irked members of Congress from both sides, who are unimpressed with Geithner's disavowals. "I'm sick and tired of hearing the administration and the secretary of the Treasury say, 'I just found out about it,'" griped a Pennsylvania Democrat.