Geithner-gate 101

At the end of 2008, Congress approved $700 billion dollars, Troubled Asset Relief Program (TARP) funds, to buy up so called, toxic mortgage securities, that were stopping the banks from making loans. However, then Treasury Security Henry Paulson along with Ben Bernanke, the new head of the Federal Reserve under Obama, decided that it would be better to just loan the money to struggling "banks and non (Investments) banks”.  At the time it is alleged Timothy Geithner President of the New York branch of the Federal Reserve (and heir apparent to the Obama's Secretary of the Treasury)  signed off on $1.2 trillion to be channeled through the investment bank AIG, to some these troubled financial institutions, not just in the US but throughout the EU. Wall Street Aristocracy got 1.2 Trillion in Secret Loans 

Early January, 2010, Congressman Darrell Issa, released information he received from his own federal Freedom of Information request, regarding the exchange of money between the Federal Reserve and AIG. What was discovered was shocking and most likely illegal. As it turned out, AIG funneled the money to national and international banks whom they owed money. The debt owed by AIG was in the form of stock derivative called a Credit Default Swap or CDS. A CDS is similar to a insurance policy, AIG did not have to have any money in reserve in case the insurance had to be paid out and the beneficiary doesn't have to have any connection to the property.

According to a series of emails obtained and made public by Congressman Darrell Issa, AIG had planned to inform investors in a regulatory filing published on December 24, 2008, that it had paid counter-party banks owed money at a rate of 100 cents on the dollar. The banks were owed the money for credit-default swaps they had entered into, mainly on behalf of clients.
AIG Told to Keep Quiet About Payments

These CDS' only value, is that of a marker to his bookie; in this case the bookie had to pay out.
The companies in the United States that invested in these CDS were, Goldman Sachs, AIG, Merrill Lynch, Bank of America, Citibank and Wachovia. The International banks were in France, Germany, Britain and Switzerland; $30 billion of AIG stock was bought, along with purchases of stock from "RBS, based in Edinburgh. Deutsche Bank AG (DBK), Barclays Plc (BARC) and UBS AG (UBSN) each borrowed at least $15 billion (using stock as collateral), according to the graphs, which reflect deals made by 12 of the 20 eligible banks during the last four months of 2008.
Fed Gave Banks Crisis Gains On Secretive Loans

At a time when the economy of the country was teetering on the verge of collapse, these banks colluded with each other to pay off these CDS, these derivatives serve no other purpose, than enriching these elitist bankers who already destroyed the economy.

Hours earlier, the chairman of the House Financial Services Committee said his panel will investigate bailout decisions Geithner signed off on when he was president of the Federal Reserve Bank of New York....The New York Fed quietly funneled billions to banks to satisfy financial commitments AIG had with them. The deals might have cost taxpayers billions more than necessary because Geithner declined to demand concessions from the banks, an earlier watchdog report said.
Treasury and the Federal Reserve refused to say which banks benefited from the “backdoor bailouts” or how much money they got until after it was disclosed in news reports. Banks including Goldman, Morgan Stanley, Deutsche Bank and Societe Generale benefited from the deals...AIG had been negotiating the values of banks’ contracts before the government took it over in September 2008, according to published reports. Geithner considered reducing the payments for two days before paying the banks off in full.

Geithner to Testify on Secretive Bailout Deals

Unfortunately, Geithner is having some problems with this defense. One looming issue are emails from New York Fed Lawyers, at the time Geithner was still president, that instructed AIG not to disseminate how the funds were distributed. While there is no smoking gun or email with Geihtner's name on it yet, it is beyond  reasonableness to believe that the third most powerful economist in the world, who was moving up to be the Secretary of the Treasury, in what was described as a seamless transfer,  turned a blind unknowing eye to AIG and Goldman Sachs, while he continued overview of the New York Fed.