Former Secretary of the Treasury Henry Paulson testified before Congress about his role in the bailout of A.I.G. During his July 16, 2009 sword testimony, Paulson said: “I want you to know that I had no role whatsoever in any of the Fed’s decision regarding payments to any of A.I.G.’s creditors or counterparties.”
"Role” is defined as: “a function or part performed especially in a particular operation or process.” Paulson’s sworn statement was clear. Paulson claimed to have played “no role whatsoever in ay of the Fed’s decision.” The evidence, however, directly contradicts Paulson’s sworn testimony.
Through Freedom of Information Act requests, The New York Times recently obtained substantial information about Paulson’s role regarding the Fed’s payments to A.I.G.’s creditors and counterparties. The Times investigation revealed the following:
A. The Testimony of Anonymous Whistleblowers Contradicts Paulson’s Sworn Testimony.
The New York Times spoke with two anonymous whistleblowers. They have revealed:
But according to two senior government officials involved in the discussions about an A.I.G. bailout and several other people who attended those meetings and requested anonymity because of confidentiality agreements, the government’s decision to rescue A.I.G was made collectively by Mr. Paulson, officials from the Federal Reserve and other financial regulators in meetings at the New York Fed over the weekend of Sept. 13-14, 2008.
These people said Mr. Paulson played a major role in the A.I.G. rescue discussions over that weekend and that it was well known among the participants that a loan to A.I.G. would be used to pay Goldman and the insurer’s other trading partners.
Paulson’s testimony is thus directly contradicted by two people familiar with the Fed’s decision to funnel taxpayer money from A.I.G. to Goldman Sachs.
B. Paulson Wrote a Letter to the Federal Reserve Regarding A.I.G.
The New York Times reported:
Mr. Paulson’s involvement in the decision to rescue A.I.G. is also supported by an e-mail message sent by Scott G. Alvarez, general counsel at the Federal Reserve Board, to Robert Hoyt, a Treasury legal counsel, that same day. The subject of the message, acquired under the Freedom of Information Act, is “AIG Letter,” and it contains a reference to a document called “AIG.Paulson.Letter.draft2.09.16.2008.doc.” The letter itself was not released.
Why did Paulson write a letter to the Federal Reserve about A.I.G.? According to the file’s date, Paulson created the file on September 16, 2008 – the same day that the Federal Reserve gave billions to A.I.G.
What did this letter say? The Treasury and Federal Reserve have stonewalled the Times, refusing to respond to FOIA demands for the letter. Even without reading the actual letter, is it consistent for Paulson to claim that he had “no role whatsoever,” when he was in fact sending official letters to the Federal Reserve about A.I.G.?
C. Paulson’s Spokesperson Confirmed that Paulson’s Wanted to “Rescue” Goldman Sachs.
Paulson requested an “ethics waiver” that allowed him to have one-on-one, off-the-record conversations with Goldman Sachs officials.
Paulson will not respond to press inquiries. His spokesperson, however, told the Times: “The waiver was in anticipation of a need to rescue Goldman Sachs, not to bail out A.I.G.”
The “need to rescue Goldman Sachs,” was inextricably entwined with the need to bail out A.I.G. Everyone – including Paulson – knew that Goldman would lose billions if A.I.G. went bankrupt. Everyone – including Paulson – knew that Goldman would receive billions if A.I.G. was bailed out.
How could someone concerned with rescuing Goldman Sachs claim to have played “no role whatsoever” in A.I.G.’s decision to pay billions to Goldman Sachs? Goldman needed the money. Paulson ensured that Goldman got it.
D. Paulson Personally Called A.I.G. CEO Robert B. Willumstad, Firing Willumstad.
On Sept. 16, 2008, the Federal Reserve bailed out A.I.G. On the same day, Paulson personally called Robert B. Willumstad, A.I.G.’s CEO. Paulson fired Willumstad. (Please see the attached Wall Street Journal article.)
If Paulson had played “no role whatsoever,” why did he personally call Mr. Willumstad to dismiss him? Are we to believe that the Federal Reserve simply called Paulson to delegate him the task of firing Willumstad?
Moreover, Paulson’s next step was crucial. Paulson replaced Willumstag with Edward Liddy.
Before being anointed CEO by Paulson, Mr. Liddy was on the Board of Directors of Goldman Sachs.
If Paulson had had “no role whatsoever in any of the Fed’s decision regarding payments to any of A.I.G.’s creditors or counterparties,” then why did Paulson already have a replacement in mind?
E. Paulson Was Not Too Clever By Half.
Henry Paulson might, in the words of today’s youth, defend himself as follows: “I ‘punked’ Congress. Sure, I played a major role in the Fed’s decision to bail out A.I.G. I was instrumental in having A.I.G.’s CEO fired. I was instrumental in appointing a Goldman Sachs Board member as A.I.G’s. CEO. However, none of that proves that I played a role in the ‘Fed’s decision regarding payments to any of A.I.G.’s creditors or counterparties.’”
Paulson’s defense would fail. First, it is contradicted by two anonymous informants. Second, it is contradicted by the extensive evidence, noted above. Paulson lied before Congress. He is a clever man, but he was not clever enough. He committed perjury.
- wrote letters to the Federal Reserve concerning A.I.G.;
- wanted to “rescue” Goldman Sachs;
- fired A.I.G.’s CEO;
- and anointed a Goldman Sach’s Board member as CEO of A.I.G.
Further, two anonymous informants have revealed that Paulson played a major role in A.I.G.’s decision to pay billions to Goldman Sachs. No rational person could conclude that Paulson played “no role whatsoever in any of the Fed’s decision regarding payments to any of A.I.G.’s creditors or counterparties.”
Paulson committed perjury and should be prosecuted.