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On Hill, Geithner Seeks Expanded Powers

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel. On Capitol Hill, the nation's top two economic officials got a three-hour grilling. Both Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke expressed indignation over the taxpayer-funded bonuses at insurance giant AIG. They also used the public's outrage over AIG to plead for broad new powers, powers that would allow the government to take control of failing national financial behemoths.

NPR's David Welna reports.

DAVID WELNA: What a difference a week can make. When Treasury Secretary Timothy Geithner was supposed to appear before a House Financial Services panel last week, he begged off, citing a scheduling conflict. At the time, calls were growing for Geithner's resignation amidst the AIG imbroglio and his fumbled rollout of a plan to buy up bad assets. Taking his seat before that panel today, Geithner appeared poised and confident. After his second, more successful rollout yesterday of the plan to buy up troubled assets, his own stocks seem to have shot up as much as equities did on Wall Street, and he was making no apologies.

Secretary TIMOTHY GEITHNER (Treasury Department): This is an extraordinary time for our country, and your government has been forced to take extraordinary measures.

WELNA: Geithner then called for yet another extraordinary measure. He said the US Treasury should be given power to step in and take over firms like AIG, just like the power the FDIC has to take over banks. Fed Chairman Ben Bernanke added his full endorsement to that request.

Mr. BEN BERNANKE (Chairman, the Federal Reserve): If a federal agency had had such tools on September 16th, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now.

WELNA: Lawmakers promise to consider the request, but many preferred talking about the AIG bonus payments that caused such a furor last week. Geithner sought to show that he, too, remained indignant.

Sec. GEITHNER: Now, I share the anger and frustration of the American people -not just about the compensation practice at AIG and in other parts of our system, but that our financial system permitted a scale of risk taking that has caused grave damage to the lives of so many Americans.

WELNA: That prompted a challenge from a dubious California Democrat, Brad Sherman. He asked Geithner to make public how many executives at firms getting bailout money make more than a million dollars, how many got bonuses over half a million dollars and how many will get bonuses this year of over a quarter million dollars.

Representative BRAD SHERMAN (Democrat, California): Are you going to give us the chart, or are you going to hide the ball?

Sec. GEITHNER: I'm going to hide the ball. I will...

Rep. SHERMAN: Are you going to give us the chart?

Sec. GEITHNER: I will reflect on the suggestion you made and see if that is a...

Rep. SHERMAN: In other words, you won't commit to telling the American people how many folks at Goldman Sachs or AIG are going to make a million dollars this year.

Sec. GEITHNER: Congressman, I will think carefully about your proposal and get back to you with...

Rep. SHERMAN: Thank you for thinking. Let me move on to the next question.

WELNA: But the sharp questioning of Geithner wasn't over. Illinois Republican Donald Manzullo wanted to know why big financial firms insured by AIG got 100 percent reimbursements.

Representative DONALD MANZULLO (Republican, Illinois): Did the people who took out insurance with AIG to insure their retirement plans get reimbursed 100 percent, so they suffered very little loss? Yes or no.

Sec. GEITHNER: It depends on the nature of those specific contracts. It depends on the nature of those contracts. But what the critical thing is, the damage to the average American pension fund...

Rep. MANZULLO: No, you did not answer the question. The average American person has already lost 40 to 50 percent of their insurance plans.

WELNA: Geithner told the House panel more financial troubles could be in store, and that in that case, it would be his obligation to seek more funds from Congress. In light of what's happened in the last weeks and months, though, he said he recognized getting those funds would be extraordinarily difficult.

David Welna, NPR News, the Capitol. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

David Welna is NPR's national security correspondent.

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