Barry Ritholtz, in a post entitled Special Inspector General: NY Fed Screwed Up AIG Bailout, argues that the government can’t seem to get it right even when they have a no-brainer: “The Federal Reserve Bank of New York, in a desperate headlong rush to rescue American International Group, screwed the pooch. Despite holding all of the cards, cash and power, they still managed to manuver themselves into a corner with “little negotiating room.”
Ritholtz and others implicitly assume that the government’s definition of “right” was consistent with the taxpayer’s definition. If getting it right, however, were defined as bailing out financial cronies at the expense of taxypayers, then the NY Fed (then headed by Tim Geithner) performed magnificently.
Motives are mere speculation. It seems to be that Tim Geithner, with regard to this matter, was either incompetent or deliberately bailed out his buddies. Neither alternative is comforting because the taxpayer loses both ways. Geithner, however, won receiving a promotion to Treasury Secretary. At least now he pays his taxes (we think). What a great country! For everyone except the taxpayers.
Some related articles:
- Watchdog: Gov’t May Have Overpaid to Bail out AIG (abcnews.go.com)
- Geithner Strikes Back (blogs.wsj.com)
- Jill Schlesinger: TARP Audit Finds Geithner Gave Away The Farm (huffingtonpost.com)
- Watchdog says government overpaid on AIG (msnbc.msn.com)
- Watchdog: Fed’s AIG Bailt Strategy Flawed (abcnews.go.com)