Fed Report Rakes Geithner Over AIG Bailout

He's accused of handing AIG creditors 'backdoor bailout'
By Rob Quinn,  Newser Staff
Posted Nov 17, 2009 4:18 AM CST
Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington before a House Financial Services Committee hearing on AIG.   (AP Photo/Pablo Martinez Monsivais)

(Newser) – Tim Geithner did a lousy job of looking out for the interests of taxpayers during the AIG bailout last year, according to a report from a federal oversight group. Geithner, then head of the Federal Reserve Bank of New York, made no attempt to renegotiate AIG's debts, effectively giving the insurer's creditors a "backdoor bailout," the report found.

"Tens of billions of dollars of government money was funneled inexorably and directly to AIG’s counterparties," stated the report, signed by special inspector Neil Barofsky. The report is nothing more than “20-20 hindsight” and “second guessing" of tough decisions made during the financial crisis, a Treasury official tells Politico, although Barofsky notes that AIG's creditors got a much better deal than GM and Chrysler creditors.