Geithner: 'I'll carry the burden' of AIG forever

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- A day after facing furious lawmakers on Capitol Hill, Treasury Secretary Tim Geithner told CNN on Thursday that he would forever "carry the burden" of the decision to bail out AIG but defended it as the government's only option.

AIG was on the brink of collapse in September 2008 when Geithner, then the president of the Federal Reserve Bank of New York, captained the troubled insurer's bailout.

"I'll carry the burden of those decisions forever, but I'm very proud and confident in the decisions we made," Geithner told CNN's Christine Romans. "The American people in the crisis got a very raw deal, but it would have been worse if their government let the financial system fail."

The rescue of AIG was controversial at the time and only more so today. The troubled insurer made risky bets on mortgages and was so interconnected with the rest of the financial sector that it became "too big to fail."

When the bottom fell out of the housing and financial markets in 2008, AIG required a $181 billion taxpayer-funded bailout to stay afloat -- and keep the rest of the financial sector from sinking with it.

At a House Oversight Committee hearing on Wednesday, lawmakers on both sides of the aisle grilled Geithner about the most controversial aspect of the bailout: a decision to use taxpayer funds to make AIG's business partners whole.

Geithner said that he is aware of the criticism being rained down on him by lawmakers and the public, but he stands by his actions and by regulators' decisions to save the economy from collapse.

AIG was "the basic symbol of unfairness" and acknowledged that "people should be outraged by this," Geithner said. He urged Americans to turn their furor into support for measures in Congress to change the rules that govern banks and financial firms.

"If you don't think there's a good case for reform ... remember AIG and and what happened in terms of the abuse of consumers," he said.

The interview also touched on the economy, jobs, President Obama's State of the Union address and the confirmation of Federal Reserve Chairman Ben Bernanke.

He said that the financial system is in "dramatically better shape" than it was six months ago and that now it's time to turn to jobs.

Echoing Obama, Geithner said that supporting businesses through tax incentives is necessary to spur job growth. But in a comment seemingly directed at Congress, Geithner noted that businesses are eager to find out about the scope of the government's plans for financial and health care reform.

"Businesses need to know what certain rules of the game will be and have more clarity about what is going to happen to health care reform."

On Wednesday night, before Obama approached the podium in the House chamber, the president patted Geithner on the back and the two had a brief exchange. Media speculation was that Obama offered Geithner his support after a grueling hearing on the Hill. Geithner declined to say what they discussed.

He was glad to discuss his full support for Bernanke, however. The interview took place shortly before Bernanke was confirmed by the Senate for a second term, but Geithner called the confirmation "critically important."

"It's important for the country to have strong people lead us out of the crisis to recovery and growth," Geithner said. To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET
Sponsors

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.