Thursday, February 17, 2011

Did Secretary Geithner violate federal law with Chinese favor?

In a recent Reuters story that discussed China's growing influence as America's largest creditor, it was reported that Treasury Secretary Geithner was asked for a special favor by a top Chinese money manager. What was this favor you ask? According to cables obtained and released by Wikileaks, in June, 2009, the head of China's powerful sovereign wealth fund met with Geithner and requested that he lean on regulators at the U.S. Federal Reserve to speed up the approval of its $1.2 billion investment in Morgan Stanley. Although the cables do not mention if Geithner took any action, China's deal to buy Morgan Stanley shares was announced the very next day.

According to the Reuters story, the two Treasury officials to whom the cables were addressed, Deputy Assistant Secretary for Asia Robert Dohner and Deputy Assistant Secretary for International Monetary and Financial Policy Mark Sobel, declined through a spokesperson to comment for this story. Oddly enough, the State Department declined to comment as well. I don't pretend to be an expert in this field, but I would think if Secretary Geithner did in fact act upon this request, he would be in violation of federal law. We know from Secretary Geithner's Senate confirmation hearings that he violated US tax laws to the tune of $35,000, so it's not hard to imagine he feels he is above the law.

I have contacted Congressman Issa's office and requested they look into this possible federal violation. Congressman Issa and his staff have their hands full investigating possible crimes committed by the Obama administration, but this is something that needs to be looked into. If Secretary Geithner didn't break the law, great let's move forward, but if he has, he needs to prosecuted to the fullest extent of the law. You can read the Reuters story here and if you're so inclined, contact Rep. Issa here.

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