This is a rush transcript from "On the Record ," March 18, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Fire the Treasury secretary. Well, at least two members of Congress are saying tonight that he should go. Tim Geithner has only been our Treasury Secretary for less than two months, but as the president of the Federal Reserve Bank of New York, he was one of the architects of last September's bailout of AIG. And some say that's the problem. Yes, he helped save AIG, but why didn't he stop these multi- million-dollar bonuses? What is Geithner saying? That he only heard about the bonuses last week. Now, some say Geithner should be fired.

Sudeep Reddy, economy writer for The Wall Street Journal, wrote in the fall about Geithner's involvement in the AIG bailout and has been following it since. Sudeep, he was part of the architect last summer as president of the Federal Reserve Bank of New York and now he says he only heard about these contracts last week. And I accept it at face value, but it certainly does call into question his competence if he didn't bother to look into it last fall. I don't know whether it's -- you know, I mean, that's not good.

SUDEEP REDDY, WALL STREET JOURNAL: Well, if you put yourself into Tim Geithner's mind, you're seeing somebody who was watching a financial collapse at the time and was trying to focus his energy on a certain area of preventing that actual aspect of the collapse. And one of his risks (ph) is he hasn't really done well politically. He probably wasn't thinking about the political implications back then, which has now become the political implications for the Obama administration. And so the argument that he didn't know...

VAN SUSTEREN: But see, $165 million isn't political to me.

REDDY: Well...

VAN SUSTEREN: I mean, I realize it's a political thing, but -- and that we've gotten these huge numbers now so the $165 million does seems sort of like chump change. But it really isn't! You know, it's -- it's not political. It's a lot of dough.

REDDY: It is a lot of money, and it's outrageous and Tim Geithner would say it's outrageous that these payments were made. The argument that he didn't know about any of these bonuses I don't think really flies here. He knew in October, November that there were some bonuses. The issue here may be that he wasn't really focused on this particular unit of the company that got the $165 million. There are over...

VAN SUSTEREN: They were the...

REDDY: There were a billion dollars...

VAN SUSTEREN: But they were the failure unit! That would be the unit -- the failure -- the unit that's getting the bonuses, I understand, and correct me if I'm wrong, is the unit that's getting these bonuses are the ones who are largely responsible for the failure. So it seems to me if you're the architect of the bail-out, you look at the failing unit to see why the company is sinking, and then you see that they've got these huge bonuses. Duh!

REDDY: Absolutely. Now, I cannot...

(CROSSTALK)

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REDDY: I'm not here to defend Tim Geithner over this because either knew or should have known that there would be other problems that come out of this. They knew this was a big -- big act that would be controversial when they bailed out AIG. They had reasons for doing it. But the process didn't really work in terms of addressing these specific things. But they did look at other things about compensation. The new CEO's making a dollar. Other people were forced out. So they looked at it in some ways...

VAN SUSTEREN: But that's the largess...

REDDY: ... they didn't look at it deeply enough. That's the problem.

VAN SUSTEREN: But that seems like the largess of Liddy, you know, that he was willing to work for a dollar. Let me ask you a question. Why did Geithner -- why are they willing to bail out AIG and not Lehman Brothers?

REDDY: This is the question that we'll always be asking. And if you go back a year ago, Geithner was involved in the Bear Stearns bailout, too, and this is one of his risks now and one of the risks when he was appointed, is he is a member of the administration who was involved with a lot of the Bush administration actions.

And you can argue and he would probably argue that instead of having both hands on the wheel, he had a few fingers on the wheel because Hank Paulson was making a lot of the ultimate decisions about whether to do some of these bailouts. But he was involved in it, and that's what the Obama administration -- they're standing behind him because they really don't have a choice now, but they recognize the risks with him.

VAN SUSTEREN: Sudeep, thank you.

REDDY: Thanks.


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