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House Panel Asks Paulson to Testify at AIG's Hearing on Payments to Trading Partners

Posted on 18 Jan 2010

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Edolphus Towns, chairman of the House Oversight and Government Reform Committee, has asked former Treasury Secretary Henry Paulson to join his successor Timothy Geithner in testifying before a House panel examining bailout payments to American International Group Inc.'s (AIG) trading partners.

The Jan. 27 hearing is set to look into the decision to fully reimburse AIG's bank counterparties for $62.1 billion in derivatives. Stephen Friedman, the former Federal Reserve Bank of New York chairman who serves on the board of Goldman Sachs Group Inc., was also asked to appear.

“Chairman Towns is well aware of the fact that President Bush's Treasury secretary orchestrated this bailout,” Jenny Rosenberg, a spokeswoman for the New York Democrat, said in an e-mail explaining why Paulson was invited.

The request widens the probe into what lawmakers have called a “backdoor bailout” of banks that benefited from the $182.3 billion U.S. rescue of AIG. Geithner, who ran the New York Fed when AIG was saved in 2008, agreed to testify before the committee after Darrell Issa, a California Republican, released e-mails last week showing that the New York Fed asked AIG to withhold data about bank payments.

The Federal Reserve and Treasury should be subpoenaed for documents tied to the rescue and attempts at limiting disclosure, Issa said yesterday in a letter to Towns. Towns subpoenaed the New York Fed this week for Geithner’s AIG-related e-mails and phone logs after Issa, the ranking Republican on the oversight committee, called for the documents.