WASHINGTON—Treasury Secretary Timothy Geithner wasn't involved in deliberations between the Federal Reserve Bank of New York and American International Group Inc. over what the insurer should disclose in regulatory filings, a top bank official said in a letter to a U.S. lawmaker.
Thomas Baxter Jr., general counsel at the New York Fed, said in a Friday letter to Rep. Darrell Issa (R, Calif.), ranking Republican on the House Committee on Oversight and Government Reform, that then New York Fed President Geithner "played no role in, and had no knowledge of, the disclosure deliberations and communications referenced in those emails."
The emails in question, released by Mr. Issa's office Thursday, show that officials at the regional Fed bank told AIG not to disclose key details of their agreements to make big payouts to banks in late 2008. AIG later had to amend its regulatory filings several times and provide the information after the Securities and Exchange Commission requested more disclosure.
U.S. lawmakers, particularly Republicans, have seized on Mr. Geithner's role in the matter. The Treasury has said Mr. Geithner was not involved in the disclosure decisions, and many of the released documents cover a period when he had already recused himself after being named by President Barack Obama as his treasury secretary.
Mr. Baxter said in his letter that the matters "were not brought to the attention of Mr. Geithner" because the general counsel felt it "did not warrant the attention" of the then head of the New York Fed.
Mr. Issa said Mr. Baxter's letter provides an incomplete picture of the high-stakes negotiations between AIG and the New York Fed. In a statement released by his office, he said Mr. Baxter has been asked to meet with committee investigators.
"This letter raises more questions on the inner-workings of the New York Fed during one of the most pivotal periods in our nation's history," Mr. Issa said.
The House Oversight panel, chaired by Rep. Edolphus Towns (D, N.Y.), is scheduled to hold a hearing on AIG later this month, to which Messrs. Geithner and Baxter have been invited to appear.
The decision by AIG and the New York Fed to pay off in full the insurer's counterparties on some $62 billion in bets on soured mortgage securities has become a popular target for lawmakers and the public outraged at the financial crisis and its aftermath. Congressional pressure forced AIG to release the names of banks that were made whole, with the biggest payouts going to French bank Societe Generale SCGLY) and Goldman Sachs Group Inc.
The issue also represents another headache for Mr. Geithner, who is already dealing with a struggling economy and fragile financial system he inherited when taking office, as well as an effort to overhaul regulation of U.S. financial markets.
