Posted on 18 Nov 2009
Former Republican congressman Rob Simmons, seeking a U.S. Senate seat from Connecticut, called on Treasury Secretary Timothy Geithner to resign over his role in the bailout of insurer American International Group Inc (AIG).
Simmons, who is bidding to challenge Democratic incumbent Christopher Dodd in the 2010 election, cited a report issued Nov. 16 by the watchdog of the $700 billion Troubled Asset Relief Program that faulted the Federal Reserve Bank of New York for making “limited efforts” to protect taxpayer funds during last year’s rescue of AIG. Geithner was president of the bank at the time.
The report “adds considerably to the lack of confidence” in Geithner’s “ability to effectively guide the nation through these troubled times,” Simmons, 66, said in a statement yesterday. “America can no longer afford Geithner’s failed prescriptions and mismanagement.”
While Geithner has been mostly praised by Democrats for his handling of the financial crisis, Simmons’s move shows that Republicans are gearing up to use the government’s Wall Street bailout as a campaign issue. Dodd, as chairman of the Senate Banking Committee, played a central role in the TARP legislation and is leading a push for overhauling financial rules.
In his statement, Simmons faulted Dodd, 65, and Geithner, 48, for having a “cozy relationship” with “bailed out financial companies.”
Geithner spokesman Andrew Williams declined to comment on Simmons’s remarks. A spokeswoman for Dodd in Connecticut didn’t immediately return a call seeking comment.
Simmons, who served in the House of Representatives from 2001 to 2007, is one of several Republicans seeking the party’s nomination to run against Dodd.
Asked at a press conference yesterday about the report on the AIG rescue, Geithner said it was a strength of the U.S. that people examine “every decision made in every stage in this crisis, and look at the quality of judgments made and evaluate them with the benefit of hindsight.”
“You’re going to see a lot of conviction in this, a lot of strong views -- a lot of it untainted by experience,” Geithner said.
AIG, once the world’s largest insurer, was saved last year with a package of loans and investments that has swelled to $182.3 billion. Banks, including Societe Generale SA, Goldman Sachs Group Inc. and Deutsche Bank AG, received the full value on credit-default swaps purchased from New York-based AIG to protect against declines in mortgage-linked investments.
The “policy decisions came with a cost -- they led directly to a negotiating strategy with the counterparties that even then-New York Fed President Geithner acknowledged had little likelihood of success,” the TARP special inspector general, Neil Barofsky, said in the report.