US Treasury Secretary Timothy Geithner has said he acted properly in the 2008 bail-out of AIG and the subsequent disclosure of pay-outs from the insurance giant to major banks.
Geithner is facing increasing heat over his role in the bail-out when he was president of the New York Federal Reserve. He told a congressional panel that the actions were aimed at financial stability and that authorities 'did not act to help foreign banks'.
'Congress granted the Federal Reserve emergency authority precisely so that the government had some capacity to act to contain a systemic financial crisis,' his testimony said. 'Not to have used that authority at that time would have been deeply irresponsible,' he added.
Geithner also maintained that he was not involved in a decision to withhold information about AIG's pay-outs that some have called a 'backdoor bail-out' of those firms including Goldman Sachs and a number of foreign banks.
Overall, Geithner offered an impassioned defence of the role of the central bank and other authorities to rescue AIG in the face of what appeared to be a financial system meltdown in September 2008.
'We acted because the consequences of AIG failing at that time, in those circumstances, would have been catastrophic for our economy and for American families and businesses, he said.
Geithner's remarks were prepared for delivery to the House of Representatives Government Oversight Committee on his role - when he was president of the New York Federal Reserve - in the controversial AIG bail-out.
The Fed provided a loan of $85 billion to AIG in September 2008 in what would be the first portion of a staggering bail-out worth some $180 billion.
