WASHINGTON ( TheStreet) -- A few interesting details emerged from the great Wall Street Inquisition on Wednesday, as bank CEOs issued tacit admissions of failure, defended their firms' size and pay practices, and outlined ideas for regulatory reform. Appearing before the Financial Crisis Inquiry Commission, Goldman Sachs ( GS) CEO Lloyd Blankfein added fuel to a scandal of secrecy about the government's handling of payouts to American International Group ( AIG) counterparties. Blankfein said regulators never asked his bank -- which received one of the largest claims -- to take a haircut on its derivative holdings.
The appearance of Goldman Sachs CEO Lloyd Blankein (above) grew contentious at times.
Blankfein's comments turned up the heat on Treasury Secretary Timothy Geithner, who was then a key decision-maker about the counterparty payouts in his role as chairman of the Federal Reserve Bank of New York. The Fed paid AIG's counterparties 100 cents on the dollar for their positions, despite the fact that those firms would have received nothing had AIG failed. Blankfein's comments indicated that the Fed did little to no haggling to preserve taxpayer money. The House Oversight Panel has subpoenaed information from the New York Fed, and Geithner is expected to testify about the matter next week. A revelation earlier this week that the Securities and Exchange Commission allowed AIG to keep certain information about counterparty assets hidden until 2018 has turned the matter into something like a regulatory trifecta of secrecy. Another interesting revelation from Blankfein and his Morgan Stanley ( MS) counterpart, John Mack, was that although the markets were terrified that banks would be nationalized at the start of 2009, the possibility never entered the minds of top managers.