« Liddy On AIG Payouts At Par: "The Fed Made Us Do It" (Video) »
CNBC David Faber Clip (2:34).
Youtube version of the same clip.
Ok, who's surprised? 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), 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.
Digging deeper, it was likely Paulson who orchestrated the entire show and made the decision to pay claims at par, knowing that it would be a simple yet effectively hidden manner of further re-capitalizing Wall Street (and Goldman) without pesky questions from Congress. We have been told there were 4 attendees at the meeting to decide AIG's fate: Paulson, Lloyd Blankfein (CEO of Goldman Sachs), B-52 and Geithner. That is Paulson's crew, and any decisions emanating from this meeting are ultimately his responsibility, no matter how it is spun to Congress months later.
CNBC's David Faber put it together this morning. The short clip is after the jump and I've added a youtube version of the same clip for CNBC-challenged viewers.
Thursday, May 14, 2009 at 3:51PM
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Reader Comments (17)
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.
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.
No explanations, excuses, apologies?...........Well, OK then.
Good to have you back, DB! we missed you.
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?
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.
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.
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.
http://www.baseball-almanac.com/poetry/po_sad.shtml
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.
Thanks for the kind words. I have no excuse for the unexplained absence. I just needed to get away from the site for a few days. Ok, 2 weeks. Glad eveyone stayed around. It means a lot to me.
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.
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.