Geithner under fire in Congress over AIG bailout

AMERICAN lawmakers turned up the heat on US Treasury secretary Timothy Geithner over his role in the bailout of insurer AIG, challenging his claim he did not influence a decision to keep quiet AIG payments to big banks.

Both Democrats and Republicans questioned whether Geithner, who led the New York Federal Reserve Bank at the time, could have been in the dark over the decision not to disclose details of $62bn (£38m) AIG paid to banks to settle swaps contracts.

One Republican said he should resign.

Geithner held firm to his defence that he had withdrawn from decisions by the New York Fed after he was nominated to the Treasury post in late 2008.

He forcefully defended his role in helping rescue AIG.

“For the first time since the Great Depression you were seeing a full-scale run on the financial system,” Geithner said, with his temper occasionally flaring at the close questioning.

“People were taking their savings out of the banks, they were wondering if a dollar was a dollar ... There was a basic calamitous breakdown in the fabric of our system.”