Show them both the door. Maybe Timmy is afraid to upset the friends that he developed during his time at the New York Fed when all of this was building. Let the guy join a club and buy friends but do it on his own dime and his own time. What part of “public” did he miss with “public service”? Geithner works for the American people, not Wall Street.
As early as December, two Democratic lawmakers had vociferously and repeatedly complained about the bonuses, and one of them went so far as to demand the resignation of A.I.G.’s chief executive.
But both Mr. Geithner, and the chairman of the Federal Reserve, Ben S. Bernanke, were preoccupied at the time with multiple crises. The nation’s banks were reeling from as much as $2 trillion in mortgage-related losses. The recession was deepening and unemployment was soaring.
Mr. Bernanke’s team at the Fed and Mr. Geithner’s team at Treasury, moreover, were reluctant to impose what they viewed as “punitive” and possibly self-defeating pay restrictions on companies being bailed out.
In early February, Mr. Geithner opposed a provision in the economic stimulus bill that would have slapped a steep tax on the kind of bonuses that A.I.G. was about to pay.
If A.I.G.’s plan to pay out an additional $165 million in bonuses came as a surprise to Mr. Geithner, it did not come as a surprise to staff at the Treasury, the Federal Reserve in Washington or the New York Fed.
Staff at all three agencies had been in daily communication with each other about A.I.G. ever since the Fed agreed to lend the company $85 billion in September in exchange for almost 80 percent of the company.
In late November, after A.I.G.’s plight became worse and the Treasury jumped in with a $40 billion capital infusion, the three agencies negotiated cuts in bonuses and salaries for many of the company’s top executives.
Officials at the New York Fed carried out the most direct oversight of A.I.G., and they were well aware of the coming bonus payments, said a person familiar with the matter.
When they say “New York Fed” they are talking about Geithner and his team – Geithner was running the NY Fed up until he became Obama’s Treasury Secretary. This horror story gets worse by the day.