Fighting Words

Spitzer: How Geithner Blew It

Caved to banks on AIG.

A new report on AIG by Special Inspector General Neil Barofsky "reads like a case study in failed negotiation" and suggests that then-New York Fed President and current Treasury Secretary Timothy Geithner "grievously damaged the nation and capitulated to the very banks [he] should have been supervising" according to New York ex-Governor Eliot Spitzer's column in Slate. Spitzer says that the decision by Geithner and the Fed to pay AIG's counterparties—the leading Wall Street banks—100 cents on the dollar while demanding concessions from other entities makes no sense. As Spitzer puts it, "pressuring Goldman and other counterparties to offer concession would have forced them to absorb the consequences of making suspect deals with an insurance company that was essentially a Ponzi scheme."