Geithner on the defensive as lawmakers lash out

WASHINGTON - When Timothy Geithner emerged as the leading candidate for Treasury secretary in late 2008, he privately urged President-elect Barack Obama to think twice about hiring him. As a key architect of the government's bailout of Wall Street, he reminded Obama that he would carry that history into the new job.

The warning proved prescient Wednesday as House lawmakers vented public anger over Wall Street's return to prosperity while unemployment stands at 10 percent.

Geithner was pummeled by Democrats and Republicans alike at a hearing before the House Committee on Oversight and Government Reform over his role in the $180 billion bailout of insurance giant American International Group Inc.

"In effect, the taxpayers were propping up the hollow shells of AIG by stuffing it with money. And the rest of Wall Street came by and looted the corpse," committee chairman Edolphus Towns (D-Brooklyn) told Geithner.

Geithner, one of the original architects of the government's 2008 response to the financial crisis as president of the Federal Reserve Bank of New York, defended the use of taxpayer money as necessary to head off "potentially catastrophic damage to the economy."

Lawmakers are concerned with revelations about efforts to keep details of the AIG deals secret. Though Geithner said he "played no role in those decisions," lawmakers expressed skepticism.

"Many people, including people of this committee, have a hard time believing Secretary Geithner entered into an absolute cone of silence," California Rep. Darrell Issa, the committee's top Republican, said.

Geithner and Federal Reserve Chairman Ben Bernanke have found themselves on the defensive, both targets of political discontent and rising voter anger over bailouts and bonuses.

With AP