US Treasury bosses deny knowledge of AIG payments
US Treasury Secretary Tim Geithner and his predecessor Henry 'Hank' Paulson distanced themselves from the decision to pay $105bn of money owed by AIG to counterparty banks, the Telegraph reports.
But they stressed to the House Oversight Committee that AIG could not have been allowed to fail. "For the first time since the Great Depression you were seeing a full-scale run on the financial system," Geithner said. He faced at least one call to resign.
Paulson said that if AIG had not been saved, the US unemployment rate could have exceeded 25%, as opposed to the 10%.
Roadblock
The FT said that before the hearing, police put a roadblock at the foot of Capitol Hill to keep out protestors.
It reported that an email written by “TFG75” – Timothy Franz Geithner – to senior Fed officials, asked: “Where are you on the AIG counterparty disclosure issue?”
But it was written on 15 March 2009, after Mr Geithner had taken up his new job at the Treasury and on the day that the names of AIG’s counterparties were released.
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