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

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