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Tim Geithner’s Federal Reserve Bank of New York urged American International Group (AIG) to remain silent on $105bn (£65bn) of payments made to banks including Goldman Sachs and Deutsche Bank at the height of the financial crisis.
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The New York Fed, under Mr Geithner’s leadership until he was appointed US Treasury Secretary in January 2009, instructed the troubled insurer to withhold details of the payments from the American public, which bailed out AIG by as much as $182bn at its financial nadir.
According to a series of emails obtained and made public by Congressman Darrell Issa, AIG had planned to inform investors in a regulatory filing published on December 24, 2008, that it had paid counter-party banks owed money at a rate of 100 cents on the dollar. The banks were owed the money for credit-default swaps they had entered into, mainly on behalf of clients.
However, according to the emails, an official from the NY Fed crossed out the reference ahead of publication, and there was no mention of the payments, which came to light five months later, in the filing.
January 8, 2010