A Tale of Two Treasuries ( Alexander Hamilton vs. Geithner/Paulson

The American Spectator ^ | 6.8.09 | Darrell Issa

[kellynla]

In his debut as the nation's 75th treasury secretary, Timothy Geithner has been a smashing success -- if success is measured by more federal debt and less accountability to American taxpayers. It was never supposed to be this way.

When our first treasury secretary, Alexander Hamilton, sought to establish the nation's first bank in 1791, he faced challenges from those who condemned the move as an unconstitutional power grab to control the flow of credit and direct the national economy. Against these criticisms, Hamilton drafted numerous provisions to ensure solvency, transparency and fiscal restraint on the part of the federal government. "No government,” Hamilton argued, "has a right to do merely what it pleases.”

But when it comes to the government's managing of the AIG bailout, that's exactly what is happening. An unprecedented power-grab by the Paulson/Geithner Treasury has spent an unparalleled amount of money to purchase a failing financial giant with no accountability, no return on the investment and no end in sight.

A bit of history. Before Timothy Geithner assumed his cabinet post at Treasury this year, he served as the president of the Federal Reserve Bank of New York, where he was the chief negotiator for many of the government's bailout proposals last year. One such bailout involved AIG, a whale of a multi-national corporation beached sideways on a mound of credit default swaps and other high-risk financial products.

In September 2008, Geithner engineered the government's purchase of an 80% share in AIG for the handsome sum of $85 billion, the amount necessary to prevent the company from entering bankruptcy. Losses continued to mount, however, and more federal dollars were needed.

[kellynla]

Darrell Issa (R-Calif.) is Ranking Member on the House Committee on Oversight and Government Reform.