Geithner denies role in AIG disclosure decisions

U.S. Treasury Secretary Timothy Geithner came in for sharp criticism from both Republicans and Democrats on Wednesday for his role in the bailout of insurance giant American International Group, which cost taxpayers more than $180 billion US.

Some members of the House of Representatives committee on oversight and government reform challenged his testimony that he played no role in withholding information about AIG's dealings.

Geithner, who before becoming treasury secretary headed the New York Federal Reserve Bank, has faced criticism over decisions there that might have cost taxpayers billions more than necessary.

A bailout watchdog has said the Federal Reserve system should have demanded concessions from banks that were owed money by AIG, rather than paying them in full. And lawmakers are concerned about emails that show New York Fed officials demanding the deals be kept secret.

"I don't think there was a better alternative available," Geithner said Wednesday. He also said he stepped down from day-to-day oversight at the Fed once President Barack Obama nominated him as treasury secretary, and "I played no role in those decisions" regarding secrecy.

One after another, representatives vented their anger at Geithner, reflecting public frustration over bank bailouts and rich bonuses being paid as Wall Street firms recover from the recession but unemployment remains at 10 per cent.

"It just stinks to the high heaven what happened here," Massachusetts Democrat Stephen Lynch told Geithner. "The disclosure was not there at the proper time to tell the American people and tell this Congress what was going on."

Ohio Democrat Marcy Kaptur said Geithner was more beholden to banks than to taxpayers when he ran the New York Fed, and cut him off abruptly when he tried to deny it.

Faced 'catastrophic' consequences

Geithner asserted that "the consequences would have been catastrophic" had the government not bailed out AIG, America's largest insurer.

But Florida Republican John Mica told Geithner: "Either you were in charge and did the wrong thing or you participated in the wrong thing."

Recalling an earlier controversy over Geithner's failure to pay some personal income taxes, Mica declared: "You gave lame excuses then, you are giving lame excuses now. Why shouldn't we ask for your resignation as secretary of the treasury?"

Said Geithner: "You have a right to your opinion."