Paulson Says He, Geithner Acted Properly on AIG

[sabra]

Source: CNBC/AP

Former U.S. Treasury Secretary Henry Paulson staunchly defended the decision to rescue troubled insurer American International Group in 2008 and said he and others involved acted properly.

In testimony prepared for a hearing on Wednesday of the U.S. House of Representatives Oversight and Government Reform Committee, Paulson said he, Timothy Geithner who then was president of the New York Federal Reserve bank, and Fed Chairman Ben Bernanke acted properly because the situation was dire.

"If AIG collapsed, it would have buckled our financial system and wrought economic havoc on the lives of millions of our citizens," said Paulson, who headed Treasury from 2006-2009 in the former Bush administration.

The hearing is to examine how AIG handled payments to banks that were counterparties for credit default swaps that AIG had issued and to examine why it paid 100 cents on the dollar to settle them rather than getting a discount.

Read more: http://www.cnbc.com/id/35088795

[RC]

1. Part of the deal to bail them out should have been long prison terms

for the greedy criminals involved in the schemes that brought them down.
Too big to fail, my ass. Make the CEO and Board of Directors pay back the shortages. They can afford it.

[defendandprotect]

2. Crooks vouching for crooks?

[still_one]

3. They did need to bailout AIG because everything from money market accounts to

insured investment accounts would have collapsed

However, that is not the real story. Congress should have at a minimum FIRED everyone at AIG who was involved with the meltdown

Congress should never have allowed any bonus to be paid, and they should have broken up AIG immediately

[Vinnie From Indy]

8. Agreed!

The fact is that Paulson and Bernanke had no choice but to step in when they did or the collapse of AIG would have dragged down many more financial players around the globe. It would have been a cascading failure that could easily have been a systemic, global crash.

I also agree that even though the step was necessary, the handling of the terms and such was badly mishandled.

[aquart]

4. Yes, but he lies.

[BlueJac]

5. Fuck Paulson

[scentopine]

6. Well then, there you have it. Move along...

fucking bastards would slit their own mother's throat if made them a dime.

[No Elephants]

7. The situation was indeed dire. However, bc the bailout lacked sufficient conditions, the situation

stayed dire longer than it would have if the legislation had been well-crafted. And who was it who ran around to the Sunday talk shows saying the sky was falling and would crush us all unless Congress acted immediately and unconditionally? Secretary of the Treasury Paulson. And who told AIG to cover up facts? Secretary of the Treasury Geithner.

Well, at least I assume the situation was dire, based upon what were told. Who the hell really knows if what we were told was the truth, the whole truth and nothing but the truth? Never mind, we know it wasn't. And that's about all we know.

The criminals are in charge of the henhouse. (Yeah, I know. Mixed metaphor)

The transfer of power, like the transfer of wealth, happened while we were all busy making other plans.

[Turbineguy]

9. When you consider

that with a some courage and vision, the whole meltdown could have been stopped out at $40 billion.

Of course, with just a teensy bit more vision, the rules disallowing these transactions would not have been revoked.

I think to come back 18 months later and look at the situation is OK, but people were operating in the dark. The protagonists were lying to them and nobody really knew what the outcome would be. As it happens, the system did not totally collapse. There are times when you have to do something, even if it's wrong. This was one of them.

Once we are stabilized the derivatives need to be unwound. People who invest in them have to understand what the risks are. And they have to be willing and able to suffer the consequences. That would severely limit these instruments.

[Johnny Harpo]

10. What Else Would You Expect Them To Say...I'm Guilty?

n/t

[Subdivisions]

11. Does anyone here know that there is a hearing currently in progress

featuring Geithner (on now) and Paulson (this afternoon)?

http://www.c-span.org/Watch/C-SPAN3.aspx

[bvar22]

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