Former U.S. Treasury Secretary Henry Paulson staunchly defended the decision to rescue troubled insurer American International Group Inc. in 2008 and said he and others involved acted properly.
In testimony prepared for a hearing Wednesday of the U.S. House of Representatives Oversight and Government Reform Committee, Paulson said he, Timothy Geithner who then was president of the New York Federal Reserve bank, and Fed Chairman Ben Bernanke acted properly because the situation was dire.
“If AIG collapsed, it would have buckled our financial system and wrought economic havoc on the lives of millions of our citizens,” said Paulson, who headed Treasury from 2006-2009 in the former Bush administration.
In his prepared remarks before the committee, U.S. Treasury Secretary Timothy Geithner held out hope to Congress that a hefty investment to bail out insurer AIG and avert its catastrophic failure will gain value as the economy improves.
Geithner also defended the controversial 2008 rescue and said it was done solely to protect U.S. taxpayers’ interests.
“We acted because the consequences of AIG filing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses,” he said in excerpts from the testimony which Treasury released on Tuesday night.
(Reporting by Glenn Somerville; editing by Andre Grenon and Kim Coghill)
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