Scroll down for video of Geithner's interview with CNBC.
Tim Geithner believes that bailed out insurer AIG was "absolutely" right to pay other bailed out Wall Street firms 100 cents on the dollar for their toxic credit default swaps. Geithner also believes that there was no other option.
CNBC's John Harwood interviewed the treasury secretary about the new tax on banks, AIG payments, bank bonuses, and the New York Fed's decision to advise AIG to keep quiet about the payments.
During the interview, Geithner maintained that even as Chief of the New York Fed, he was not involved in the decision to advising AIG to keep details of the payments private.
The House Committee on Oversight and Government reform has asked Geithner to testify about the New York Fed's advice to AIG. The insurer, which is now majority-owned by the U.S. government, paid a total of $62 billion to banks.
The Business Insider has posted a transcript of the interview. Video is below:
HARWOOD: As you know, you've been asked to testify before Congress about some memos that came out, Congressman Issa released regarding AIG and advice the New York Fed gave to not disclose the full repayments to some counterparties of AIG. Now, I know you've said that you--or your spokesmen have said that you were not involved in those memos. But did you agree with the advice in the memos? Was it sound advice?
Sec. GEITHNER: You know, I haven't looked at those memos, actually. I wasn't involved in that decision. But I do think the Fed--the Fed did disclose all that information subsequently. I think they made the right thing disclosing it. It's important for the American people to see all that information. But you know, John, what this is about is is a deep sense of anger and frustration that the government thought it was necessary to come in and prevent AIG from failing. That was a hugely consequential decision, a very offensive decision to most people. Deeply offensive to me, too. But it was necessary to do. And we did it in a way that I believe was not just least cost to the taxpayer, best deal for the taxpayer, but helped avoid much, much more damage than would have happened without that. If we could have done it differently, we would have done it differently. But this was the best way to do it.
HARWOOD: You still believe it was the right thing to pay counterparties 100 cents for the dollar?
Sec. GEITHNER: Oh, absolutely. Again, the way--this is a tragic failure in the system, and we had no effective legal means to step in and prevent default without doing what you said, helping this firm meet all its legal obligations. That's why at a centerpiece of the president's reform proposals is to give the government the tools to unwind, dismember, break up, sell these institutions without the taxpayer being put in the position of having to absorb their losses. That's the basic--one of the most important reasons why we have to get reform in place. We had no choice at the time other than to do this. And I'm, personally, very confident it was the right thing to do, and we did it in the best way possible for the American people.