Issa lashes out at New York Fed over AIG bailout disclosures

Rep. Darrell Issa (R-Calif.) on Sunday night lashed out at the Federal Reserve Bank of New York for limiting the disclosure of information during the bailout of American International Group (AIG).

Issa said that e-mails unveiled last week showed that the New York Fed aimed to limit the disclosure surrounding tens of billions of dollars worth of payments associated with derivatives transactions. Treasury Secretary Timothy Geithner, who was head of the New York Fed at the time, has come under new scrutiny over what is one of the most controversial parts of the government’s bailout efforts.

{mosads}More than $60 billion of bailout money was used to pay out AIG’s derivatives obligations to a series of major American and foreign banks.

A Treasury spokeswoman said last week that Geithner played no role in the disclosure deliberations.

The House Committee on Oversight and Government Reform has called for a hearing with Geithner and Fed lawyer Thomas Baxter.

Baxter said in a letter to Issa on Friday night that the disclosure matters “were not brought to the attention Mr. Geithner.”

“In my judgement as the New York Fed’s chief legal officer, disclosure matters of this nature did not warrant the attention of the president. Further, Mr. Geithner played no role in, and had no knowledge of, the disclosure deliberations and communications referenced in those e-mails,” Baxter said.

Issa said in a statement on Sunday that he is seeking additional information from Baxter and the New York Fed.

“It is a staggering admission,” Issa said about Baxter’s letter.

“This letter raises more questions on the inner-workings of the New York Fed during one of the most pivotal periods in our nation’s history.”