WASHINGTON -(Dow Jones)- U.S. Treasury Secretary Timothy Geithner on Wednesday will tell lawmakers that he wasn’t involved in deciding what information to disclose about controversial payments the rescued American International Group made to its counterparties.
“I had no role in making decisions regarding what to disclose about the specific financial terms of Maiden Lane II and Maiden Lane III, and payments to AIGs counterparties,” he plans to tell the U.S. House of Representatives Government Oversight and Reform Committee, referring to the $62.1 billion in payments and to separate Federal Reserve funding facilities set up to purchase assets from the troubled insurance giant.
In prepared testimony released by a committee member late Tuesday, Geithner defended the government’s decision to rescue the firm, saying officials acted in what they believed to be the best interests of the American people.
“We did not act to protect the financial interests of individual institutions. We did not act to help foreign banks,” the testimony reads.
Geithner, who at the beginning of the AIG bailout was president of the New York Federal Reserve Bank, will detail how he withdrew from decisions such as those that would impact the company on Nov. 24 as he became President Barack Obama’s nominee for Treasury Secretary.
Lawmakers have been investigating the counterparty payments, referring to them as a “backdoor bailout” of banks made whole on $62 billion of troubled insurance contracts. The Oversight and Government Reform committee has collected more than 250,000 pages of documents from the Federal Reserve Bank of New York on the matter.
Former U.S. Treasury Secretary Hank Paulson is among those also scheduled to testify about the AIG rescue Wednesday. Paulson also will deny having a personal role in deciding to make in full payments to AIG’s major trading partners, according to his prepared testimony. He will say the payments needed to be made to prevent broader problems in the financial system.
If AIG had failed, “I believe we would have seen a complete collapse of our financial system and unemployment easily could have risen to the 25% level reached in the Great Depression,” Paulson’s testimony reads.
Meena Thiruvengadam, Dow Jones Newswires