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No Effective Legal Means

“We had no effective legal means to step in and prevent default (at ÌìÃÀÍøÕ¾´«Ã½´«Ã½) … without helping this firm meet all its legal obligations.”

—U.S. Treasury Secretary Timothy Geithner told CNBC television that the bailout of insurer American International Group was not meant to help out bank counterparties and that he had no role in the decision not to disclose payments made to banks. In his first public comments since e-mails surfaced showing the New York Federal Reserve — when Geithner was at the helm — advised ÌìÃÀÍøÕ¾´«Ã½´«Ã½ not to disclose payments it made to banks after receiving a taxpayer bailout, he said the insurer was legally obligated to make the payments. The e-mails, which showed lawyers for the New York Fed advising ÌìÃÀÍøÕ¾´«Ã½´«Ã½ not to disclose payments that gave 100 cents on the dollar to banks holding ÌìÃÀÍøÕ¾´«Ã½´«Ã½ credit default swaps, have touched off a firestorm of controversy.(Reuters)

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