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« TARP Watchdog Rips Tim Geithner (CNBC) | Main | McCain Demands 'Watergate Style' Investigation Of Benghazi »
Sunday
Nov042012

AIG CEO On Paying Counterparties (Goldman Sachs) 100 Cents On The Dollar: "The Fed Made Us Do It"

Great stuff.  Runs 2 minutes.  David Faber on Ed Liddy's exchange with Darrell Issa over AIG counterparty payouts at par.

Background:

 

 

---

The question is which Fed?

Does Liddy mean Bernanke (doubtful), Geithner as head of the Federal Reserve Bank of New York last Fall when the deal got done (merely a puppet of Bob Rubin), or Henry Paulson and Lloyd Blankfein, the circus clowns? 

The answer is not as critical as the need to ask the question. The secret is out; it has long been assumed that the AIG bailout was a stealth bailout for AIG's counterparties: another way to shovel taxpayer dollars to Wall Street and European banks without going to Congress for permission.  Aig CEO Edward Liddy admitted as much yesterday in his testimony before the House Oversight Committee under questioning from California Republican Darrell Issa.  Liddy said he acted under explicit instructions from the Fed to pay AIG counterpary obligations at 100 cents on the dollar (par), even though the contracts were trading at substantial discounts and could have been settled for much less.

Story was originally published May 14, 2009.

 

Further reading:

 

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Reader Comments (15)

Welcome back, Daily Bail.
May 14, 2009 at 4:13 PM | Unregistered CommenterJames H
I personally believe that Paulson made tremendous operational blunders in his attempts to fix or contain this economic mess. And Bush didn't pay much attention because he believed Paulson probably knew best. I label these "operational blunders" because Paulson did not make the laws or policies or run the companies that gambled so recklessly and brought about the disaster.

The leadership at the Federal Reserve also gets no laurels from me.

But that is opinion. Historians will argue forever.

OTOH be cautious about any Washington investigations and the facts found . It is quite pleasing to those now in public offices, and to those still running the involved companies, to remember it was the fault of those other guys. Those other guys who are now ousted or otherwise departed. And it is convenient to find damning documents supporting that.

It is equally convenient for media to report that those they favor, or favored in the past, always had the right policies and facts. And that they, the media, always had it right too.

"history is written by the winners" applies as much today as ever.
May 14, 2009 at 4:46 PM | Unregistered CommenterK
Nice work, DB. I watched these hearings last night on C-Span and I was ELATED when Liddy dropped the F-bomb ("Fed") on the whole sordid CDS affair. I was also very, very pleased to see Darrell Issa asking the relevant questions. Issa even probed the issue of bankruptcy for AIG -- was it "systemic," how much would it have saved, how much would it save us now...etc. Kudos to Liddy, but he didn't give a hearty endorsement of "too big to fail."

Also of potential interest, Mary Kaptur (Ohio?) asked that minutes of Goldman Sachs board meetings, from Bear Stearns up to AIG, be subpoena'd. Ding, ding, ding!!! We might have a winner on that one. Would LOVE to hear what transpired there. We'll see how crafty the boys and girls at Goldman really are.
May 14, 2009 at 4:57 PM | Unregistered CommenterJames H
So that's it, huh?

No explanations, excuses, apologies?...........Well, OK then.

Good to have you back, DB! we missed you.
May 15, 2009 at 10:28 PM | Unregistered CommenterMark McHugh
I am fully aware of the apparent conflicts Pauson and Liddy have because of their prior affiliations with Goldman. But it is a felony to lie during Congressional testimony. He more clear that it was the Federal Reserve who called the shots

Maybe I'm naive, but when Liddy says not once but twice that it was the FED calling the shots, don't you have to believe him in the absence of strong contradicting evidence?

What specific evidence can you piont to that Liddy is lying?
May 17, 2009 at 12:06 PM | Unregistered CommenterTorches and Pitchforks
@Torches and Pitchforks (nice moniker!)

What is Liddy supposed to be lying about? (And who said he was lying?) Maybe I missed something. Myself, I think he's telling the truth, here. Certainly takes the heat off him.
May 17, 2009 at 12:42 PM | Unregistered CommenterJames H
James H.:

Daily Bail and other blogs have expressed opinions that Paulson orchestrated the decision to pay AIG counterparties at 100% of par. Liddy says during Congressional testimony the decision was made by the Federal Reserve. My point is that if it was the Treasury calling the shots, then Liddy had an obligation to finger the Treasury during his Congressional testimony. Instead Liddy says the decision was made by the FED.

I have no dog in the fight. But when bloggers lay blame on the former administration when the person most closely associated with the event lays the blame at the FED, I have to wonder if those blaming Paulson are playing a game of partisan politics.
May 17, 2009 at 1:32 PM | Unregistered CommenterTorches and Pitchforks
T&P,

I see, now.

However, the only party at The Daily Bail is the torches and pitchforks party. As far as I know, we all just want our money back and are angry about being ripped off by our government and their banker friends. Paulson, Bernanke, Geithner, Bush, Obama... let God sort 'em out -- ust as long as we get our money back before He smites them.

Now, per Liddy's testimony, there's no reason Paulson didn't run the CDS show via Bernanke and the Fed. Tinkers to Evers to Chance.
May 17, 2009 at 1:59 PM | Unregistered CommenterJames H
Sorry, Joe T. That's Tinker, not "Tinkers."

http://www.baseball-almanac.com/poetry/po_sad.shtml
May 17, 2009 at 2:02 PM | Unregistered CommenterJames H
Torches and Pitchforks

I was definitely not playing partisan politics. I am not a fan of either party, though I applaud the efforts of certain members from both sides.

I was just expressing my opinion that I think Paulson called the shots over Bernanke. Very possibly I am wrong. I just don't see the Fed and Bernanke getting involved to make sure that counterparties got par on payouts. I know the rescue of AIG was officially a Fed rescue, by law, but I was guessing that it really was Paulson who prodded Bernanke to tell Liddy to make the payouts at a buck.
May 17, 2009 at 7:15 PM | Registered CommenterDailyBail
DB....How was Guantanamo? Did you get out on good behavior or because you promised to not speak out against our fearless leader? By the way...did anyone catch the ND speech on how our faith in and of itself leads to doubt? I really feel we have set the low point our Nations moral standard. We must accept gay rights, abortion, tax punishment on the wealthy...all the while..... we bail out the corporations owned by those same wealthy people...with stolen taxpayer dollars and forced to compromise our beliefs to accommodate other belief systems that are contrary to ours just for the sake of open diologue and unity. America has lost it's way and there is NO majority of beliefs or morality...at least in our leadership. O was speaking out of both sides of his mouth. How can one stand firm on the Word and speak of acceptance for those that practice beliefs and actions contrary to that Word. The Word I speak of is the Bible. You are neither hot nor cold but lukewarm. You are either for or against it....no fence sitters gonna' make it to the promised land. That aint NO BS!!!!!
May 17, 2009 at 11:20 PM | Unregistered CommenterAin't Bullshittin'
Not Paulson, Volcker. Who Volcker works for, I don't know.


Group of Thirty chairman Paul Volcker, one of Bernanke's and Paulsons many bosses, is using another central banker's tool (the IMF) to move toward the New World Order and the end of the sovereignty of the nations of the world at least in terms of banking in the short term. They are especially concerned with controlling the hedge and private equity funds, the financial instruments (policy/regulation like leverage), and the size of the banking institutions (not too big to fail, too big to be told what to do by them). They are also not fond of the power that nations like the US give to regulating bodies like the SEC. They also need to control the quasi government organizations that are now subject to national government policies rather than their own.

http://www.imf.org/external/pubs/ft/survey/so/2009/NEW051409A.htm

The central bankers are using the Group of Thirty to control this economic collapse. Read this...

http://www.group30.org/pubs/pub_1460.htm

You don't need to buy it, just hit the click here to download pdf report. This is their game plan. Also, take a look at the members of the Group of Thirty, Mervyn King especially. By the way, Bernanke is above Paulson. That was established with regards to Ken Lewis and Bank of America.
May 17, 2009 at 11:26 PM | Unregistered Commenteranon
@AB,

That's the Slick Willy Redux you're talking about.
http://dailybail.com/home/obama-plays-the-semantics-game-the-return-of-slick-willy.html

Clinton had a tactic called "triangulation." http://en.wikipedia.org/wiki/Triangulation_(politics) Slick Willy would sort of position himself off to the side of the left-right axis by taking an eclectic mix of ideas acceptible to most people, even if the hard core preferred a more extreme left (or right) position. For example, instead of deciding the issue of gays in the military, Clinton came up with "don't ask, don't tell." It's a ridiculous position that doesn't totally satisfy anyone, but it lets you capture the fat middle group of voters.

Obama, on the other hand, has taken triangulation to a whole new level. He merely talks about his critics' positions. He mentions the other side, but then he just does the opposite. You think he's listening, you think he understands your position, but it really doesn't matter. That's just a ruse to disarm you. The budget is a perfect example of this. He can go on and on about how bad budget deficits are -- you think he's going to talk about cutting spending, but in reality he's just pimping his health care "plan" which will require... wait for it... .... hundreds of billions of dollars in new spending.
May 17, 2009 at 11:54 PM | Unregistered CommenterJames H
How Bush got away with all of his bull shit, I really can't explain. Except that the WH Press Corps (Helen Thomas excepted) are a bunch of incompetent pussies. (It's probably not legal to say exactly how I feel about Bush and Cheney.)
May 18, 2009 at 12:01 AM | Unregistered CommenterJames H
I am with you James. Eloquently put.
May 18, 2009 at 9:19 PM | Unregistered Commenterspideydouble

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