Explosive emails released last week could see Treasury secretary Timothy Geithner become embroiled in criminal charges for his role in a cover up that exposes the monumental criminality behind the $182.3 billion bailout of American International Group Inc.
In November and December 2008, The Federal Reserve Bank of New York instructed the bailed out AIG to hide from the public details regarding payments the insurance giant made to banks, including Goldman Sachs Group Inc. and Societe Generale SA.
Using Fed secured taxpayer bailout money, AIG paid several banks 100 percent of the face value of credit-default swaps, as other financial institutions were negotiating deep discounts for the unregulated paper assets that do not have to be backed by cash.
Via his Texas Straight Talk phone update, Congressman Paul said today that Geithner had helped hide from taxpayers the fact that banks were compensated for “making some horrifically bad decisions”.
“These banks should have suffered the consequences of the huge risks they were taking,” said the Congressman. “After all, they kept plenty of rewards when times were good. Instead, the Fed found a way to socialize these major losses so these banks could survive and continue making more bad decisions, at the expense of the American people and the value of the dollar.”
Paul pointed out that claims the bailout helped save the economy are directly contradicted by the latest job figures, which show 85,000 job losses in December and the unemployment rate, which according to traditional calculations stands at a whopping 22 per cent.
“It is hard to argue that this sort of government waste has done anything but harm to our economy,” said Paul. Raiding Main Street to bail out Wall Street is a foolish idea. Main Street productivity and the strength of the dollar is the bedrock of the economy. You cannot gut this foundation without eventually toppling everything else. This is what too many policy makers either don’t understand or refuse to face. Or even worse, perhaps they do understand, but don’t care!”
The Congressman added that the whole fiasco only underlined the preposterousness of the claim that the Federal Reserve should retain its independence.
“This claim that the Fed should have “independence” is a canard,” said Paul. “They very much enjoy their comfortable pattern of bailing out friends and devaluing the currency with no oversight and no accountability. Geithner specifically asked officials at AIG not to disclose to the SEC or to the public particulars about this special deal for his friends. We only know these details now because AIG was eventually forthcoming when Congress demanded some answers.”
Paul said that Geithner has been “praised and thanked” for his actions but instead should be “rebuked and fired,” while the scandal proves that the Fed should be stripped of its power to engage in “experimental” monetary policy in the future.