The NYT reports:

The inspector general who oversees the government’s bailout of the banking system is criticizing the Treasury Department for some misleading public statements last fall and raising the possibility that it had unfairly disbursed money to the biggest banks.

Is it just misleading or plain ole lying?

Former Treasury Secretary Henry M. Paulson Jr., for instance, said on Oct. 14 that the banks were “healthy,” and that they accepted the money for “the good of the U.S. economy.” The banks, he said, would be better able to increase their lending to consumers and businesses. In truth, regulators were concerned about the health of several banks that received that first bailout, the inspector general writes.

Treasury Secretary Timothy Geithner said “signs of economic recovery are “stronger” and have appeared “sooner” than expected”.  Is he telling the truth this time? Don’t bet on it!

Zero Hedge has a must read on Judicial Watch’s release of Treasury Department talking points of the meeting with the nine big banks in October. The release demonstrates that Ken Lewis was telling the truth when he says he was threatened.  The Obama Administration withheld information specific to Tim Geithner’s role.  This paste is from Judicial Watch, but read the ZH post too:

“Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it forced the Obama administration to release documentsabout the October 13, 2008, Treasury Department meeting that coerced major banks to allow the government to take $250 billion equity stakes. Among the other news, the documents confirm former Treasury Secretary Hank Paulson told the CEOs of nine major banks that they had no choice but to allow the government to take equity stakes in their institutions. The documents show Obama Treasury Secretary Tim Geithner, FDIC Chairman Shelia Blair, and Fed Chairman Ben Bernanke co-hosted the meeting with Paulson.

“These documents show our government exercising unrestrained power over the private sector. Despite promises of transparency, the Obama administration tried to cover up the very existence of these smoking-gun documents. And the cover-up continues, as the Obama administration protects Timothy Geithner by withholding a key document about his role in this infamous bankers meeting,” stated Judicial Watch President Tom Fitton.”

See Clusterstock post here . Something tells us the Bernanke, Paulson, Ken Lewis conspiracy is just the tip of the iceberg.  We’ll be needing current Treasury players under oath too soon.

“Hank Paulson has recanted on what he  told Andrew Cuomo, which was that Ben Bernanke asked him to threaten to oust Ken Lewis and the Bank of America board if Lewis decided not to go forward with the Merrill deal.”

and here:

“So far, all we have is the Bank of America (BAC) CEO’s story, but if Attorney General Andrew Cuomo is actually serious about figuring out what happened, then he has to get both Ben Bernanke and Hank Paulson under oath. And if there are serious disagreements between what they say and what Lewis is saying, then someone’s committing perjury.”

As Bill Black said:

“This whole bank scandal makes Teapot Dome [of the 1920s] look like some kid’s doll set. Unless the current administration changes course pretty drastically, the scandal will destroy Barack Obama’s presidency.”