SEC Granted ‘Special Security’ Status for AIG ‘Backdoor Bailout’ Deal
January 25, 2010
(ChattahBox)—U.S. Treasury Secretary Timothy Geithner, and officials with the Securities and Exchange Commission in 2008 have some explaining to do. The House Committee on Oversight and Government Reform, plans to open its investigation on Wednesday, into the secretive nature of the so called “backdoor bailout” of insurance giant AIG by the New York Federal Reserve, which was then headed by Timothy Geithner. And According to a report in Reuters, emails turned over to Congress reveal that as suggested by the SEC and requested by the New York Fed and AIG, the details of the bailout were granted confidentiality status, approaching that of matters of national security. Although, certain details of the financial rescue have been revealed, such as the identity of the 16 banks that received backdoor cash as part of the bailout, other details have been sealed until November 2018, or the 10th anniversary of the bailout.
Congress wants all of the details of the controversial bailout package revealed. But the New York Fed claims the terms of the deal need to be kept under wraps, to permit “BlackRock Inc, which manages the portfolio of securities bought from the banks, to compete with hedge funds on an even playing field.”
According to the emails obtained by Reuters, the New York Fed ensured that certain documents filed with the SEC were treated to “special security procedures.”
“The SEC, according to an email sent by a New York Fed lawyer on January 13, 2009, agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG’s confidentiality request.The SEC had also agreed that if it determined the document should not be made public, it would be stored “in a special area where national security related files are kept,” the lawyer wrote.”‘
Timothy Geithner claims that while he was head of the New York Fed, he was not included in the discussions regarding what specific information AIG should disclose or not disclose. The beleaguered Treasury Secretary is scheduled to testify on Wednesday, before the House Committee on Oversight and Government Reform.
See Reuters for more.