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According to Neil Barofsky, the special inspector general for the $700 billion financial bailout.

In a report issued on Tuesday, Barofsky criticized the Treasury for many things, including “outsourcing” its oversight duties to the Fed, which he said had different priorities from Treasury. Speaking to the House Committee on Oversight and Government Reform on Wednesday, Barofsky added that the Treasury “still did not have their arms wrapped around” AIG’s compensation structure when he finished his audit in September.

To better understand this let’s take a brief history lesson.

Before becoming Treasury Secretary in January Geithner was president of the Federal Reserve Bank of New York. Geithner claims he was unaware of the $1.75 billion in bonuses and compensation promised to AIG employees until March. His subordinates at the New York Fed paint a different picture, saying they knew about the bailouts in November.

There’s really two things that could be wrong here. If Geithner did know about the bonuses and then tried to hide that fact then that’s a pretty serious offense. If he indeed didn’t know about it, then it’s downright negligient.

“This is a failure of communication and a failure of management,” said Barofsky.

Geithner led the Feds efforts last fall to prop up AIG with billions in emergency financing and continued to give massive aid packages to the insurance conglomerate after becoming Treasury Secretary. AIG has now received more than $180 billion in federal funding. So far officials have discovered 620 bonus programs totaling $455 million, and 13 retention plans allocating $1 billion.

“[Geithner] failed to know what he should have known, failed to do what he should have done, and failed to give us transparency” said Rep. Darrell Issa of California, a member of the House Committee on Oversight and Government Reform.

In a written response, Herbert M. Allison Jr., the Treasury’s assistant secretary in charge of overseeing the government bailout, said the department is implementing the guidelines and “has no present intention” of buying another financial company.

“We welcome your comments and suggestions as Treasury continues to strengthen oversight of financial institutions” wrote Allison.

I think I’ll save my breath.

Source:
http://news.yahoo.com/s/ap/20091014/ap_on_bi_ge/us_aig_bonuses

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