Bailout AIG and Ben Bernanke CNBC Videos: Federal Reserve Chairman Ben Bernanke Testifies Before The Senate Budget Committee
I've been working behind the scenes all afternoon on this.
We are looking into the possibility of beginning the process to file a FOIA Freedom Of Information Act request pursuant to aig counterparty disclosure. If there are any federal lawyers reading and you don't mind giving me some advice on a few small issues, please contact me: thedailybail@gmail.com.
From now on and until the day he is indicted for costing American taxpayers hundreds of billions, Joseph Cassano's name will be highlighted at the beginning of every AIG article I write. He was the head of the financial products division of AIG London that brought down the entire company and is now helping to bring down our nation.
Judging by the Bernanke testimony you are about to watch, we are not the only ones concerned today with AIG. It's now a $180 billion problem and growing. The first video is Senator Bernie Sanders of Vermont.
There are two more videos from B-52's testimony on the inside including questions from Kentucky Senator Jim Bunning who wonders if these types of losses with AIG were imagined by the Fed when the decision was made to bailout the reckless insurer turned hedge fund.
Some highlights are below from B-52's testimony from Mark Felsenthal of Reuters.
Pressed by the Senate committee to justify the latest in an expanding series of bailouts for American International Group , Bernanke said there was no alternative, even though the company had been irresponsible. "We know that failure of major financial firms in a financial crisis can be disastrous for the economy. We really had no choice," he told the panel.
"Right now, small businesses across the country, who played by the rules, paid their bills on time, can't get a line of credit, while AIG seems to have an open spigot for taxpayer money," said Senator Ron Wyden, a Democrat. Bernanke said AIG's extensive relationships with banks around the globe presented the risk of "contagion" should the company fail, and said authorities were working hard to try to neutralize dangerous positions.
"We have been doing what we can to break the company up, to get it into a saleable position and to try to defang it," he said. "If there's a single episode in this entire 18 months that has made me more angry, I can't think of one (other than) AIG," Bernanke added, equating the company's financial services division with an unregulated hedge fund.
DailyBail
updated with new links and quotes.
Reader Comments (13)
Very important editorial.
That’s a textbook rationale for any bailout. What no one is saying — the Bush folks wouldn’t, and the Obama team seems to have taken the same vow of Wall Street omertà — is which firms would be most threatened by an A.I.G. collapse. The Treasury and the Federal Reserve noted in their statement that A.I.G. is a “significant counterparty to a number of major financial institutions.”
That means that by enabling A.I.G. to avert bankruptcy proceedings, the taxpayer is also bailing out — whom exactly?
Not knowing is not acceptable. At this stage of a deepening crisis, no one is arguing that the government should let A.I.G. collapse into a disorderly bankruptcy. It is too interconnected. During the housing bubble, it used unregulated derivatives to insure mortgage securities that turned out to be toxic — without putting aside reserves in case it had to pay up. If it now went under, there could be a chain of catastrophic defaults among banks that hold the securities and related investments.
The A.I.G. bailouts fail the basic test of transparency: Who ends up with the money? Major financial institutions are not innocent victims of A.I.G.’s demise. They are sophisticated investors, and they should have known the risks being taken — and who profited mightily from the relationship before it all came crashing down.
Whoever the recipients are, they should be investigated for their roles in the crash and, to the extent possible, be made to pay for the bailouts.
The serial A.I.G. bailouts are especially problematic for their connection to the Wall Street bank Goldman Sachs. At the time of the first A.I.G. rescue last fall, it was reported by Gretchen Morgenson in The Times that Goldman was A.I.G.’s largest trading partner, with some $20 billion of business tied into the insurer. Goldman has said that its exposure to risk from A.I.G. was offset, or hedged, by other investments.
What is certain is that Goldman has lots of friends in high places — yet one more reason why this bailout has to be as transparent as possible. Lloyd Blankfein, Goldman’s chief executive, was the only Wall Street executive at a September meeting at the New York Federal Reserve to discuss the initial A.I.G. bailout. Also involved in the discussion was the then head of the New York Fed, Timothy Geithner, who is now President Obama’s Treasury secretary.
hmmm.
"Pretty unsatisfying, isn’t it? Gobs of tax money is going to bail out unnamed companies — and yet we aren’t allowed to know who they are, and are supposed to take it all on faith. You know those awful cases you read about every once in a while where a child dies in a troubled home — and then the state health department won’t divulge any information out of “privacy concerns”? This strikes me as the financial equivalent of those cases. As excuses go, it sure is convenient."
all 4 of these links are important reads.
"We are looking into the possibility of beginning the process to file a FOIA Freedom Of Information Act request pursuant to aig counterparty disclosure."
I wish you expedited success in your FOIA request. Anyone reading this, even if you are not yourselves federal lawyers, please forward this to any appropriate contact you know that can give guidance to DailyBail.
DailyBail: try contacting law professors at schools like Stanford or Berkeley. They usually have public interest attorneys on staff. You could also try Scott A. Hodes in D.C. at 301-404-0502 (http://www.infoprivacylaw.com/). He may be willing to advise Pro bono publico. Good luck.
I heard Hank Paulson has $600 million+ he would like to voluntarily contribute to the pool. I would include anyone who fraudulently profited from doing business with AIG, not just recipients of the AIG bailout. I guess that includes just about all of AIG business "partners".
Earlier Bernake said, "Well, in terms of the decision to put the money in, I've, as I said I am very angry about the situation and I am sorry that there are these gaps in regulation and in the financial resolution regime."
My translation: "I am very angry about the [public outcry] situation and I am sorry that there are these gaps in regulation [the we will find increasingly difficult to obfuscate] and in the financial resolution regime [where it is increasingly difficult to keep these institutions out of bankruptcy]."
I am rethinking my stance on capital punishment. Maybe we should reinstate execution by firing squad, or at least the threat of it, to wipe the smirks off these people. Not 60 years ago, governments executed by this means for less.
"I am so mad I may run for an office in my local government."
Be careful, becoming a politician is the fast track to corruption. I know many a good man and woman who were literally devoured upon gaining so called "public office", even with the best of intentions. There are only so many envelops and briefcases full of bribe money, advancement opportunities for friends and relatives, and innuendo that you can take. Best of luck to you in your campaign should you run though.
"I was really too honest a man to be a politician and live." - Socrates
Why anyone would continue to pay life insurance premiums with AIG is beyond my understanding. They deserve to get burned. More pandering to fear. Bombs away AIG!
Executive compensation restrictions are a smokescreen. The executives should not be receiving ANY compensation. Welcome to the unemployment lines folks. Personally, I would disqualify you from even that, until you all gave up everyone of your ill-gotten international chateaus, luxury cars, yachts, and offshore bank accounts. When every last fraudulent cent is disgorged from you, then we can have a public referendum whether to admit you back into society. Me, I'd deport you to Darfur first.