WASHINGTON - Treasury Secretary Timothy Geithner came under increased scrutiny yesterday when a key congressman said he would subpoena the Federal Reserve Bank of New York about bailout decisions made on Geithner’s watch.
Representative Edolphus Towns, Democrat of New York, said he will seek documents related to the bailout of American International Group He is chairman of the House Oversight and Government Reform Committee; it’s investigating deals that diverted billions of AIG bailout dollars to banks, including Goldman Sachs Group.
Geithner was president of the New York Fed at the time. The AIG deals might have cost billions more than necessary because Geithner did not demand concessions from the banks, an earlier watchdog report said.
The committee has been investigating e-mails from New York Fed lawyers telling AIG not to disclose details about the deal. The e-mails were released last week by California Representative Darrell Issa of California, the committee’s top Republican.
Administration officials have defended Geithner in the AIG matter by saying he was not involved in the e-mails released last week.
But the planned subpoena makes clear that the committee’s inquiry involves separate decisions Geithner made.
White House spokesman Robert Gibbs told reporters Friday that Geithner “wasn’t on the e-mails that have been talked about and wasn’t party to the decision that was being made.’’
Geithner said he recused himself from decisions about AIG after being appointed Treasury secretary.
The New York Fed’s general counsel, Thomas Baxter, wrote to Issa that Geithner “played no role in, and had no knowledge of, the disclosure deliberations and communications referenced in those e-mails.’’
Representatives of the Treasury, Federal Reserve, and New York Fed would not comment on the expanded investigation.