Timothy GeithnerThe House Banking Committee is going to have hearings on the NY Fed’s orders to AIG to make material misstatements on its 8-K filings to the SEC (and yes, the promised email timeline IS coming, it’s just not finished yet).

Bloomberg is reporting

Representative Barney Frank said the Federal Reserve Bank of New York’s 2008 order to American International Group Inc. (AIG) to suppress disclosures of bank payments is “troubling” and he supports hearings on the issue.

–snip—

“This was a previous administration and he was acting not independently but as part of the Bush administration approach,” Frank said.

Contrast that with what the Obama White House is saying:

The New York Federal Reserve Bank did not bring securities law disclosures for insurer American International Group Inc. to the attention of Timothy Geithner, who headed the bank at the time of AIG’s bailout in 2008, the bank’s top lawyer said on Friday.

So which is it? Geithner was “only following orders” as a loyal Bushie? Or, Geithner was so derelict in his duties that he did not even know that the Fed was not only inserting itself in the corporate governance of AIG by means other than that permitted by NYS Business Corporations Law, it was conspiring to violate both Sarbanes-Oxley and the SEC rule 10b-5?

Furthermore, how is ordering an illegal cover-up “regulation”? The whole idea of regulators is that they are supposed to ensure that the entities they are regulating FOLLOW the law, not force those entities to violate the law.

Which brings me to another thought, if the NY Fed under Geithner was acting outside the scope of it’s authority—and we need to tie that down– were its actions ultra vires and therefore not subject to the qualified immunity that government actors have for activities taken within the scope of their employment?

Neither of these defenses seem to offer Geithner much shelter.