Joe Kernen: "We Will Never Think About AIG Without Thinking About The Counterparties (Goldman Sachs) Who got 100 Cents On The Dollar" (NEW VIDEO)
From yesterday's Squawk Box -- runs just 2 minutes. Joe Kernen on-air attempting to describe the Goldman Sachs vampire squid wrapped around the face of humanity. You'll see it in the clip.
- Joe Kernen with Andrew Ross Sorkin
- "...Geithner of course worked at Goldman..."
Mary Thompson reports on her off-camera interview with AIG CEO Robert Benmosche. Start watching at the 2:15 mark for comments from Joe.
More detail:
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Dr. Pitchfork here. What is all this stuff I keep reading about an "Exit Plan"? How, pray tell, does digging in deeper constitute an "exit plan"? What the headline of these AIG stories should read is "AIG Goes Bankrupt -- AGAIN." Because that's what just happened. Impossible-to-pay-down debt is getting converted into equity. And we're the lucky chumps with the equity.
This part I also found amusing:
- "AIG said it will draw down as much as $22 billion from the Treasury’s Troubled Asset Relief Program, or TARP. The insurer will use that money to purchase $22 billion of the New York Fed’s stakes in the SPVs. AIG will then hand over these SPV interests to the Treasury. "
It's unclear if this is additional TARP money or not, but still, it's using taxpayer money to pay back the the govt. -- in this case the NY Fed.
Yet, the Treasury was never getting paid dividends on its original stake in AIG -- the preferred shares it is now converting into common. Do we ever get that unpaid money, or did we just toss those lost payments into the good will basket?
Ah, here be my answer (from the WSJ and re-posted on the Bail):
- "Yet, nearly two years after its near-collapse, AIG has yet to pay any cash dividends to the Treasury on the $49 billion of public money it still has invested in the company.... [T]he government believed AIG would struggle to find the cash to pay the 10% dividend rate on its preferred shares. That is why, in April 2009, the Treasury swapped $40 billion of AIG preferred shares for new, more lenient preferreds. Unlike the first set, which left the company on the hook for any unpaid dividends into the future, the new preferreds don't."
The govt., and Democrats in particular, want to call this a success story. But I don't think the public is buying it.
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Screenshot
From yesterday's Squawk Box -- runs just 2 minutes. Joe Kernen on-air attempting to describe the Goldman Sachs vampire squid wrapped around the face of humanity. You'll see it in the clip. Watch this one.
Oct 1, 2010 at 3:23 PM
Reader Comments (9)
This part I also found amusing:
"AIG said it will draw down as much as $22 billion from the Treasury’s Troubled Asset Relief Program, or TARP. The insurer will use that money to purchase $22 billion of the New York Fed’s stakes in the SPVs. AIG will then hand over these SPV interests to the Treasury. "
It's unclear if this is additional TARP money or not, but still, it's using govt (taxpayer) money to pay back the govt. -- in this case the NY Fed.
The fun with AIG just doesn't stop.
"Yet, nearly two years after its near-collapse, AIG has yet to pay any cash dividends to the Treasury on the $49 billion of public money it still has invested in the company.
...
the government believed AIG would struggle to find the cash to pay the 10% dividend rate on its preferred shares. That is why, in April 2009, the Treasury swapped $40 billion of AIG preferred shares for new, more lenient preferreds. Unlike the first set, which left the company on the hook for any unpaid dividends into the future, the new preferreds don't."
http://dailybail.com/home/where-are-the-aig-dividends-the-federal-reserve-is-getting-p.html
Thanks, Tim! Can I have another, please?
http://www.theatlantic.com/politics/archive/2010/09/tarp-the-forbidden-bipartisan-success/63803/
More crap from clueless journalists...
http://www.nakedcapitalism.com/2010/09/sorry-spectacle-of-team-obama-peace-with-honor-with-aig.html
I stopped reading here, pissed at myself for reading that much.
I'm telling you, this we-paid-back-TARP bullshit accounts for 50% of the banks' marketing budgets. That's why I hammer on it the most, to the point of publicly ridiculing unwitting bank apologists.
We-had-to-have-bailouts-or-would've-been-eaten-by-lions is the biggest mental cancer in the U.S. that I have ever encountered. If we don't kill this fucker, it is GAME OVER for the good old U.S. of A. Which it may be anyway.
$386B of the TARP has actually been disbursed. 187B has not been paid back. That's about half in my book (Pitchfork don't do decimals).
In other words, if you're looking for a talking point, it's that HALF of the TARP money lent out has never been paid back. We can play this game just as well as they can.
On that note, and concerning TARP, I've found that most people understand the Fed's reach-around as a resonant explanation for how bankrupt companies purport to "pay back" Treasury on TARP. It makes for good narrative, too, what with the Fed showing up as a villain evil enough to sneak its name onto top center of your cash and you didn't even know it.