Remember: Tell members of Congress that you want them to take action here. And join us today at 4:30 pm Eastern Daylight Time (1:30 pm Pacific) for a chat with economist James Galbraith, and later, at 7:00 pm Eastern (4pm Pacific), when Rep. Alan Grayson joins us to talk about the need for bank bailout transparency.

Last night, Timothy Geithner appeared before the House Democratic Caucus and was singularly unimpressive. He was apparently dispatched to absorb Congressional ire about the AIG situation, but didn’t say much of substance, according to those who attended the meeting — he mostly just shook his head and cussed about AIG.

It’s the same routine Bernanke played before the Senate Budget Committee hearing last week, after the announcement that AIG lost $61 billion in the 4th quarter 2008, when he said he was "very angry" at the regulatory failure involved. But let’s remember how that went down:

Using the loophole it had learned during Bear Stearns, the Fed set up two new companies: Maiden Lane II and Maiden Lane III. Two dealt with the secured lending and Three the shitty credit default swaps. The Fed lent each Maiden Lane $20 billion and $25 billion and then Maiden Lane paid off the investors that had either lent AIG the money to buy the shitty mortgage backed securities (ML II) and those who had the shitty mortgages and the corresponding insurance (ML III). To avoid booking a loss on the Fed’s balance sheet, because the Fed had some legal problems if either of these Maiden Lanes lost money, and because of a reporting requirement that Dodd had put into TARP which actually required the Fed to report to the Congress and the public about the cost to taxpayers from ML I, the Fed did some creative accounting. They still paid all of the investors off at full value (par), so that they didn’t lose anything. But they booked the loss on AIG’s balance sheet and kept Maiden Lane clean. This is the hidden story behind how AIG went from losing $38 billion during the first 9 months of 2008 to losing $61 billion in the 4th quarter.

Timothy Geithner was "one of the architects" of Maiden Lane III when he was president of the NY Fed. Business Week filed FOIA requests trying to obtain the names of the banks that have benefited directly from the bailout of AIG: "Specifically, BW asked the SEC to make public an exhibit to a Dec. 2 regulatory filing that lists the banks that have sold a batch of toxic collateralized debt obligations to Maiden Lane III." The SEC refused, saying "it would "cause substantial competitive harm” to AIG."

During Geithner’s Senate confirmation hearings, Senator Chuck Grassley (R-Iowa) pointedly expressed his concerns about the lack of transparency regarding Maiden Lane I, II, and III. He specifically asked about the "level of public disclosure about the assets being held by the Federal Reserve through Maiden Lane, LLC." Grassley was worried that the reported valuation of the assets were overpriced, and that Congress was not being given adequate information and could not present a picture of the true risk to taxpayers. Geithner defended the system, saying that "confidentiality" was necessary to "allow the asset manager the flexibility to manage the assets in a way that maximizes the value of the portfolio and mitigates risk of loss to the taxpayer."

Geithner said he believed Maiden Lane’s disclosure was "adequate."

Maybe there was a better time for Geithner to express his concern about AIG, namely when he set up Maiden Lane III, when "banks were paid in full for securities that were virtually impossible to sell in the marketplace?"