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More Attacks on Treasury Secretary Geithner – With Unsubstantiated Evidence

Reported by Julie - January 15, 2010 -

Guest Blogged by Nayef

On the "Freedom Watch" program on Wednesday ( 1/13/10), host Andrew Napolitano appeared to want Treasury Secretary Tim Geithner's head on a chopping block – despite the fact that he had no facts to explain exactly why Geithner was the bad guy. As usual, Fox – this time in the form of Napolitano – didn't want to overburden the viewers with pesky facts. It was perfectly sufficient to simply imply that some Obama official was doing something horrible and ought to be fired. Napolitano no doubt had faith that Fox' average viewer couldn't care less about facts – as long as some Dem or liberal was getting whacked, preferably someone in the Obama Administration. The right v. wrong of the AIG situation isn't really the point – which is good, because the segment was so superficial and trivial I had to get “real” information from other sources. What is the point was Napolitano's unfair, unbalanced, and selective reporting. With video.

A little background . . . to the best of my understanding (and I didn't learn this on this program, mark my words), the AIG deal was engineered during the Bush era as part of the first bailout. A controversial part of the agreement was that AIG would pay the banks the full value of what they owed (100 cents on the dollar) for pretty much worthless insurance. However, AIG was allegedly trying to negotiate better terms with the bank when the Feds stepped in – and the report held Geithner responsible. The “counterparties” to AIG were the ones who benefited – Goldman Sachs, Merrill Lynch, UBS , Societe Generale, Deutche Bank, Calyon, Barclays, and Bank of America. The problem arose when, as reported by the Huffington Post, “Geithner's people told AIG to delete references on draft regulatory filings to the sweetheart deals. And AIG then excluded any mention of them in its December 2008 filing with the Securities and Exchange Commission, keeping the information hidden from investors and the public.”

Napolitano admitted, "Though we do not know, and I have not seen any evidence of, of any personal knowledge" by Timothy Geithner, he added, "It is difficult to believe he would not have known of any of this." Using guest, Congressman Ron Paul, as his prop, Napolitano then speculated whether Tim Geithner should be be fired, “whether he knew or even if he didn't know what lawyers in his name were telling lawyers at AIG to do in a $185 billion dollar deal." Of course, Paul, repeatedly invoking the word “fraud,” said “he would have to go.” (Incidentally, Geithner, in an interview with CNBC’s John Harwood, said that “even as Chief of the New York Fed, he was not involved in the decision to advising AIG to keep details of the payments private.”) Considering that the title of the segment is “Investigating the Treasury Secretary,” it seems a little perplexing how a “fair and balanced” Fox host would be trying to take down another Obama Administration Democrat without there being an official verdict. Would a similar call by a Fox host be given about a Republican yet to be investigated? Consider Sarah Palin, investigated in Alaska for umpteen ethics violations. Fox didn't seem too concerned with a pesky little investigation when it came to Palin – Palin was rewarded with a gig as a Fox News contributor.

Napolitano talked about AIG paying Goldman Sachs 100 cents on the dollar, and the fact that nobody else will receive 100 cents on the dollar from AIG. Of course, Napolitano had to add that Geithner was the former head of Goldman Sachs – the implication being clear. Corruption is in the air! It was a splendid conspiracy theory – well, except for the part where it's not true. The report by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) released on November 17, 2009 stated that the par payment was not only for Goldman Sachs – and Geithner had nothing to do with it. All counterparties were asked to receive less than par, but most of them rejected it. Only UBS accepted a 2% reduction, but only on the condition that all the others accepted the same. In fact, the report found that Geithner actually wanted the counterparties to accept something less than par, and details why any other agreement would not go through.

Geithner may be wrong and he may be right. He may have had knowledge and he may not have. I don't know for sure what's right and what's wrong, and what the truth is. Neither does Napolitano – but that didn't stop him from trying to make the case that Geithner is just another Obama Administration bad guy. Another day on Fox, another Obama Administration official with a red “X” on his back.