In his sworn testimony today before the House Committee on Oversight and Government Reform, U.S. Treasury Secretary Timothy Geithner reasserted that he had recused himself from making any decision in connection with AIG payments to Goldman Sachs in November 2008. But he also testified that he was made aware by Fed officials that the payments had been made. He knew this at a time when it was not public information and even Congress itself had been kept in the dark.
Some scepticism has been expressed on these pages before about the credibility of this scenario.
I have had some experience over the years in advising government agencies and public officials about issues related to conflict of interest and when there is a need to step aside. When they do, they keep out of any aspect of the matter; they don’t get updates and briefings on the decision in which they did not take part.
The Committee needs to dig deeper into what the details of Mr. Geithner’s recusal were and what legal advice he had on that subject. It also needs to look more carefully at what the mechanism was by which he became aware of the AIG counterparty decision – and why he felt he should be kept in the loop on the decision from which he says he removed himself.