Geithner Tells House Panel A.I.G. Rescue Prevented Depression

Treasury Secretary Timothy Geithner told members of a House oversight committee that the government had acted "in the best interests of the American people" when it bailed out American International Group last year, the New York Times reports. Geithner said Washington's intervention had helped prevent a "second Great Depression."

The House Oversight and Government Reform Committee called Geithner and former Treasury Secretary Henry Paulson to explain how Goldman Sachs ended up with a chunk of the $85 billion that the New York Federal Reserve had marked as a rescue loan for A.I.G in September 2008. Geithner was the secretary of the New York Fed at the time, and Paulson had moved to the Treasury after a long career at Goldman Sachs.

Representatives on the House committee questioned how Goldman ended up with the money and the Treasury's inability to explain how it happened. "It stinks to the high heavens what happened here," said Rep. Stephen Lynch, a Massachusetts Democrat. "I don't like the obfuscation. And to top it all off, the disclosure was not there."

"I believe either you made a bad decision there, or there was the attempt to cover up one of the biggest bailouts, backdoor bailouts, in history," said John Mica, a Florida Republican, who called on Geithner to resign. "Now, you've tried to frame it as you did it in the interest of the people and the failure of the system. I'm telling you, these are lame excuses. You were in the charge and did the wrong thing, or participated in the wrong thing."

Geithner assured the representatives that the A.I.G. bailouts happened in accordance with the law and in the best interest of taxpayers. He said that he "did not have the ability" to do the insider dealing representatives were suggesting, and that his responsibilities put him in the middle of "enormously complicated, major things."