Maxine Waters Grills Geithner On Goldman Sachs (VIDEO)

Rep. Maxine Waters (D-Calif.) grilled Treasury Secretary Timothy Geithner on Tuesday about the role of investment bank Goldman Sachs in various government efforts to prevent a collapse of the financial industry.

During a contentious hearing before the House Financial Services Committee, Waters asked Geithner to confirm that his predecessor was a Goldman Sachs CEO, then followed up by questioning whether the firm would be one of five asset managers in the just-announced Public-Private Investment Program.

"It is possible that if they are qualified we would consider them along with everyone else," Geithner said.

"You hear a lot about the dissatisfaction about the bonuses," Waters said, "but underneath all of this is a conversation about the linkages and the connections of a small group of Wall Street types that are making decisions."

Waters advanced the linkage conversation by asking Geithner to confirm whether Goldman Sachs received TARP funds, whether Geithner's current chief of staff formerly worked for the firm, whether Goldman Sachs received funds from bailout-king AIG, and whether Goldman Sachs was somehow involved in the government's decision not bail out Lehman Brothers.

Geithner answered the last question in the negative. But as HuffPost's Tom Edsall documented:

The roots of the linkage between Goldman Sachs and AIG go back to the closing months of the Bush administration, as the financial meltdown reached crisis proportions and key decisions were made that are now reaping the whirlwind. Remember who played a key role in deciding to bail out AIG? Henry Paulson, the Goldman CEO-turned George W. Bush Treasury Secretary. Paulson, according to a September 27, 2008 New York Times piece by Gretchen Morgenson, led a team of regulators and bankers in early September to determine what to do with the most severely wounded financial institutions.

One of the participants in those meetings was Lloyd C. Blankfein, Paulson's successor at Goldman Sachs.

Out of those meetings came the controversial and heavily criticized decision to allow
Lehman Brothers, a Goldman competitor, to go belly up, and to bail out AIG. Starting with $85 billion from the Fed, taxpayers have pumped a total of $170 billion into the giant insurance company. The bailout was crucial to Goldman in that it permitted AIG to pay off its $12.6 billion debt to the firm, $8.1 billion of which was to cover AIG-backed credit derivatives.

"I am just asking the questions," Waters said, "because the talk is...that this small group of decision makers at the center of it is Goldman Sachs and that's what's causing a lot of the distrust, because people are thinking or believing that Goldman Sachs, because of the connections, have had a lot to do with the decisions that are being made."

Geithner took umbrage.

"I think it's deeply unfair to the people who are part of these decisions to suggest that they were making judgments that in their view were not in the best interest of the American people," Geithner said.

WATCH:

Waters herself has faced accusations of conflict of interest -- the finance committee member came under fire from watchdog groups when it was revealed that she may have played a role in Treasury's decision to send $12 million in bailout funds to OneUnited Bank, where her husband served as a board member. Waters addressed her critics in a HuffPost piece here.

Comments

[theOtherJK]

12:33 PM on 03/25/2009

A day after the Treasury Department gives AIG an $85 billion credit line in exchange for 80% of the company, Henry Paulson, a former chairman of GOLDMAN-SACHS appoints Edward Liddy, a director of GOLDMAN SACHS, to be chairman and CEO of AIG.
http://people.forbes.com/profile/edward-m-lid...
http://www2.goldmansachs.com/our-firm/press/p...
(Former GOLDMAN SACHS vice president Neel Kashkari becomes head of the Office of Financial Stability and TARP funds begin flowing to GOLDMAN SACHS as well.)
$12.6 billion in payouts to AIG's counterparties went to GOLDMAN SACHS, which manages to report $2.32 billion in net earnings for 2008. http://www2.goldmansachs.com/our-firm/press/p...
So here is a set of real questions on this issue for Congress and the MSM to ask Geitner:
1. What criteria did AIG claim to use to determine which counterparties would be paid, in what order, and how much?
2. What percentage of GOLDMAN SACHS' positions were paid out compared to the percentage of other counterparties?
3. How will GOLDMAN SACHS’s positions with AIG be paid out going forward?
I'm not holding my breath that any of these questions will be asked, however. Waters is the only member of Congress even raising the issue and she can't get her facts straight enough to ask a decent set of questions. Meanwhile, GOLDMAN SACHS is moving more players into position at Treasury and "paying back" the TARP portion of their payout to avoid oversight . . .

[steeler8080]

12:19 PM on 03/25/2009

I love when Maxine asks him who his CEO is. The befuddled look on Tim's face is priceless. She is dumber than a box of rocks, that much is certain.

[JXJASON]

12:57 PM on 03/25/2009

Do you every wonder why a member of Congress is only allowed a certain amount of time to ask questions? Sometimes, you cannot get to the real answers unless you have the time to ask questions AND get real answers.

There will be winners and losers in whatever happens. I suppose that Goldman Sachs, Warren Buffett and others will be the winners. Who do you think will be the losers?

[SPQR1775]

10:36 AM on 03/25/2009

Well for starters, Macine Waters have NO CONFLICT OF INTEREST at least she steer 12 million to a TARP bank in the inner city so urbanites can get loans, POWER TO THE PEOPLE. Geithner on the other hand and summers are all part of the "CABAL" of the Globalist, no wonder John McCain came to his aide, did anyone find that telling?!!!. Geithner is part of the problem, now that he is in the job, the President needs to ensure that he does what he is told to do and the President need to watch him like a "Hawk" or an Owl at night. Geithner, Paulson, Summers all these guys are big millionaires, the fact that Geithner didn't pay taxes is telling and it is an ethical delima that numerous Americans who work for the big corporations and globalist agenda continue to do. The President will ensure that the peoples agenda and not wall street is enforced. Yes, Geither at worst is a globalist at best he knows how to fix the problem, the issue is, is he occasionally helping the corrupt cabal of hence men, the CFC, World Bank etc who has not the interest of "we the people", but the interest of corporations! Time for a Revolution, a conscious revolution! "UNITE THE UNION"

[obamanation31]

10:22 AM on 03/25/2009

This kind of grilling in not effective and I still don't know the real answer.

[Archivist1000]

10:08 AM on 03/25/2009

You can call her questionning 'grilling' if you want to, but I didn't think she was very effective at getting information at all ... she kept cutting him off before he had the chance to answer the question ... it was mostly posturing on her part, from what I saw.... like 'Look how TOUGH I am' ... from the looks of the comments, it worked .... most people seem to think she accomplished something. I didn't learn anything from her questions that we didn't know already.

Asking questions is about getting answers ..... she made it all about her, since she had the power to cut him off.

Michelle Bachman was the same ... all posturing for the folks back home, not about getting info.

[HLL]

09:07 AM on 03/25/2009

Thank you Maxine Waters. Every day Geithner is revealed to be a snake on the side of Wall Street.

[AhnAmuru]

08:23 AM on 03/25/2009

Maxine, though not the most sophisticated inquisitor, did a fairly good job.

She just need to refine her style and make the questions more pointed, rather than assume that the subject intuitively understands where she's coming from.

The really lousy questioner was the white guys from Illinois Don ... thingy.

[Monica Green]

08:18 AM on 03/25/2009

I'm sorry but I'm a Maxin Waters fan! She may not be perfect. But she's no where as horrible as Bush and his bandits. She asked tough questions. Geitner is a tool. Goldman Sachs continues to Gang Rape the American dream. Finally, someone (Maxine Waters) is making the connection. And the corporate MSM focuses on some bogus take down of conflict of interest. It's classic switch and bait. Get people to focus on a non-issue, her supposed ties to a tarp bank, meanwhile ignoring the Corporate bilking of billions of dollars.

[chocolatecity]

08:50 AM on 03/25/2009

So Geithner's motivation to go through all of this trouble and to take all of this heat is just for Goldman's sake? Now if she knows of some nefarious connection Geithner has to Goldmant that shows conflict of interest then she should say so. But she basically challenged his character and motives. Which is fine if you have good reason to suspect funny business. But she didn't make that connection. His chief of staff wasn't around when they decided to let Lehman fail or bail out AIG.
I find this so disturbing because her character and motives were recently questioned in a case where it was revealed that she helped a bank get TARP. She owns more stock in that bank then Geithner would make in two years, so I would think that she might tread lightly when implying conflict of interest considering the glass house she currently throwing stones from.

[michiganfan]

09:27 AM on 03/25/2009

Goldman is the entire reason he was appointed. Goldman was Obama's second biggest campaign contributor. If you think that didn't have anything to do with Obama dumping Volcker (his key economic adviser during the campaign) and replacing him with the two-headed monster of Summers and Geithner, you're nuts.

[ideasmatter]

09:50 AM on 03/25/2009

Look, Geithner is a habitual lier: his taxes, his knowledge about the AIG bonuses. What Geithner has to expect out of his Wall Street loyalty is being part of a couple of boards, raking in tens of millions of dollars, just like Rubin has been doing. So, yes, we have little reason to trust Geithner, and, yes, he has plenty of motivation for what he is doing.

[lacrosse]

07:53 AM on 03/25/2009

She is a complete embarrassment.

[stunsitfel]

07:52 AM on 03/25/2009

After watching Maxine totalling missing the Freddie and Fannie meltdown, how could anyone take her seriously?

[Monica Green]

08:19 AM on 03/25/2009

So, did Barney Frank, Nancy Pelosi and Harry Reid.

[tmaxPA]

06:06 PM on 03/25/2009

Indeed. So did all the Republicans. Oh, except for the Republicans that CAUSED the Freddie and Fannie meltdown.

D'oh.

[freedomitchy]

07:51 AM on 03/25/2009

Maxine Waters is a true Democrat!

[LarBear]

07:50 AM on 03/25/2009

So, many of the same Congress Members who brought this whole crashing of the World Economy about, now question those who took advantage of what Congressional Members changed the Rules on to allow this to happen.... and, oh yeah! Sidetrack us with things like who got Bonuses... Pose as being outraged and angry..... PUKE!

Who is questioning the Congress Members who changed the Rules to bring this whole crash about??? Why do WE the People allow those who Engineered this mess to divert our attention??? Who took away/changed the Regulations??? Who made sure the Regulators were both under funded and did not, or legally could not, interfere???

Where was Maxine when all this was happening??? Are you going after fellow Congress Members Maxine???

[ammonman]

07:45 AM on 03/25/2009

I really think people are reading too much into this. Either democrats are tearing each other down, Geithner got his ass handed to him, or Maxine is a bitch.

Please.

This was an example of a good congressional hearing. She had questions, he answered them (sort of) she explained her concern behind those questions, and he address her concern. This was like night and day from watching the past administration in congressional hearings.

[local21]

07:38 AM on 03/25/2009

I'm a Dem and always will be but Waters is a political hack.

[Scarllatti]

07:35 AM on 03/25/2009

Maxine is trying to deflect her insider romance with the banks. She has a lot of questions to answer herself. Who does she think she is deceiving?