In DC, Obama Officials Defend Bailouts of AIG and Citigroup, Summers Speaks of Fear

Byline: Matthew Russell Lee of Inner City Press at UN
www.innercitypress.com/dc2tarp031309.html

WASHINGTON, March 13 -- The ongoing bailout of insurer AIG and its counterparties was apologized for but defended by a range of Obama administration officials this week. Treasury Secretary Timothy Geithner, until recently the president of the Federal Reserve Bank of New York and before that at the IMF, said he hated to have to bailout AIG, but "it's systemic."

His advisor Gene Sperling, a member of President Bill Clinton's economic team, said the Obama administration took office only to find AIG too big to fail, implying that this was entirely attributable to the two terms of George W. Bush. But AIG was allowed to grow without control under Bill Clinton, just as Citigroup was increasingly unsupervised under the tenure at the New York Fed of Timothy Geithner, as CitiFinancial got deeper into predatory lending (click here for Inner City Press reports on that.)

Friday in the White House Barack Obama met and then faced the Press with Paul Volcker, chairman of the Federal Reserve in the time before Bill Clinton. Volcker rarely used his regulatory powers, at least not to protect consumers from predatory lending. And yet now these are the people, along with Clinton's Treasury Secretary Larry Summers, who are defending massive transfers to Citigroup and AIG, all the while laying blame everywhere except upon themselves.

Footnote: Gene Sperling, recounting his time as an advisor to the TV show "The West Wing," said without irony that "We don't have to rely on President Bartlett anymore -- we have Barack Obama!" He said that securitization is "part of the solution." Certainly that's music to the ears of Citigroup and AIG, Goldman Sachs and Morgan Stanley. One wag wondered, concluding the week in DC, it is Gene Sperling or the Twilight Zone's Rod Sterling?

And see, www.innercitypress.com/dc2tarp031309.html