Treasury Secretary Timothy Geithner has been subpoenaed again to testify at a hearing of the House Committee on Oversight and Government Affairs about the $182.3 billion bailout of American International Group Inc.(AIG).
Emails obtained by Rep. Darrell Issa (R-CA) indicate that then-president of the New York Federal Reserve Bank, Timothy Geithner, instructed AIG to withhold key details from the public about backdoor deals made to buy out derivative trading partners of AIG at 100 cents on the dollar.
"Deals," mind you, that stuffed billions of extra taxpayer dollars into the pockets of government cronies at Goldman Sachs, Morgan Stanley, Deutsche Bank, and Société Générale among others.
So far he's successfully dodged trouble, but it's beginning to look like Geithner's jig is up. The creditors' committee representing what remains of Lehman Brothers have asked Judge James Peck to force Treasury Secretary Geithner to testify.
[Lehman Brothers Holdings Inc.] and its creditors late Thursday said they want to subpoena Treasury Secretary Timothy Geithner to question him under oath over allegations J.P. Morgan Chase & Co., (JPM) illegally siphoned billions of dollars from the collapsing investment bank in the days before it filed for the largest bankruptcy in U.S. history.
Geithner, the committee said in its filing, had more than 35 phone conversations with then-Lehman Chief Executive Richard Fuld and more than 10 with J.P. Morgan Chief Executive Jamie Dimon in the week before Lehman's September 2008 bankruptcy filing.
Lawyers for Lehman subpoenaed Geithner as part of its civil lawsuit against J.P. Morgan claiming Dimon and other top executives used inside knowledge to take advantage of Lehman as its financial state worsened.
The weekend before Lehman's monumental bankruptcy filing, the Geithner-led New York Fed became the meeting place for Wall Street titans and Washington policy makers trying to sort things out.
Lehman's Chapter 11 filing on Sept. 15, 2008, marked the largest U.S. bankruptcy case filed.
What jumped out at me in the video was when Shepard Smith briefly slipped off the mainstream media narrative by telling the truth. Pay extra attention around 3:24 in the video when he says:
Why in the world would our government, with our money, pay 100 cents on the dollar for stuff that ain't worth the paper it's printed on? Why? … I mean it's clear the banks run the country, the country doesn't run itself …
How true it is … Shep must have gotten an earful in his earpiece though, because he quickly talks over Judge Napolitano to add "kidding."
Some interesting thoughts from Gary North.
The Federal Reserve is now in damage-control mode. Ron Paul has inflicted a lot of damage [Ron Paul Schools Ben Bernanke]. This is going to get worse.
Today's Treasury Secretary was the president of the New York Federal Reserve Bank in October 2008. He was at the center of the crisis.
Unlike the CEO's of Goldman Sachs and other major players, he has always been salaried. He does not have the money to pay defense attorneys $500 an hour. But he may soon have to do just that.
No wonder Geithner has "mulled leaving the administration" already, and doesn't anticipate serving a second term either. Also of interest … Goldman Sachs CEO Lloyd Blankfein "hired a top Washington defense lawyer" last August.
If the lid is ever taken off this can of worms, the public will find out about the nature of crony capitalism. With lawyers involved, and millions of dollars at stake, the lid will be taken off.
Over time, the voters' trust in the existing system will disappear. Then will come a political day of reckoning. It will take an economic crisis to accomplish this, but that crisis is coming.
See also: Auditing the Fed will Audit the State
A storm is brewing … We're all in trouble.
[I]t's clear that Obama is trying to distance himself from Geithner for political reasons (more than one GOP candidate has stated Geithner should be fired). The real issue is whether it's been decided that Geithner will be the one who gets the albatross hung around his neck.
It's too early to know, but one thing is for certain, the litigation is beginning to shift from minor players to major players at the core of the Financial Crisis. Investors take note, this is a major shift and needs to be monitored as it will have major implications for market dynamics going forward.
Remember, the markets have been on life support from the Fed and Treasury ever since 2008 hit. If those behind that life support begin facing major legal trouble the aggressive "we will save the day" attitudes of the Fed et al may change.
And when this happens the life support will get pulled.
Make no mistake, we are heading into a Crisis that will make 2008 look like a joke. The money for all of these various programs (both in Europe and the US) simply isn't there. So this time around we're going to see stock crashes AS WELL as civil unrest, food shortages, and the like.
You, me, and the rest of us mere peasants are going to pay a dear price for the shenanigans of our central planners. Just remember, before you go blaming your neighbors, coworkers, bosses, and/or employees etc., only 545 people are directly responsible for the mess we're in.
For more details on the Geithner subpoena:
- Lehman Seeks to Subpoena Geithner
- Lehman and Its Creditors Seek to Subpoena Geithner
- Geithner and the 'Privilege' of Being American
- Geithner Subpoena: House Committee Wants AIG Emails, Phone Logs
- The Geithner AIG Story
- Geithner's New York Fed Pushed AIG To Keep Sweetheart Deals Secret (READ THE AIG EMAILS)