AIG – Page 2 – Infinite Unknown

President Obama Repaying His Masters At Goldman Sachs

April 21, 2010 by Infinite

President Obama is sponsoring a bill by the Senate Banking Committee Chairman Chris Dodd(D-CT) that would reward the Financial Firm Goldman Sachs with up to Billions of Dollars. The bill implements a $50 billion resolution fund to the firms creditors through fees that would come from banks and other businesses, which the bill calls a “nonbank financial company.” Critics are calling it a “backdoor bailouts” to Goldman Sachs who was already payed $12.9 billion in tax dollars through the bailout of AIG.

Supporters are denying the bill is a bailout because its demands the removal of some management positions but Financial Crisis Inquiry Commission member Peter Wallison said “that act – paying off the creditors when the government takes over a failing firm – is a bailout. It doesn’t matter that the management lose their jobs, or that the shareholders get nothing. When the creditors are aware that they will get a better deal with the failure of a large company than they will get with a small one that goes the ordinary route to bankruptcy, that is a bailout.”

Q&A With Billionaire Jim Chanos Part I: ‘Greece Is A Prelude’

April 13, 2010 by Infinite

Last week had the opportunity to visit Kynikos Associates in Manhattan and speak with its President, famed short-seller James S. Chanos.

The billionaire hedge funder is the stuff of legend. He made a killing shorting companies like Tyco, Worldcom, and of course, Enron. Chanos spoke with us at length on everything from how he discovered Enron’s problems to the issues at hand with Greece to the ongoing problems in China.

We’ll be running several posts on our Q&A sessions with Chanos throughout the week.

Today we talk about Dubai, Greece, and the role of derivatives in these markets.

———————–

Business Insider: Let’s talk about Dubai and Greece. Dubai – was it just a case of a nation that saw too much growth and excessive debt?

Jim Chanos: No, no. Dubai was a property bubble. Plain and simple. Go to Dubai and see what happened. It was…what I call it the “Ediffice complex” – it’s just, we can grow by putting up lots and lots of buildings and trying to attract people to come here, stay here, and put up offices here and sooner or later, you put up too many. And whether it’s the Palm Island project or the indoor ski resort or, you know, take your pick because everyone has lots of Dubai stories. At first it seemed plausible and economic and by the end of the boom, they were putting on drawing boards all kinds of crazy projects. So it didn’t take a rocket scientist to see the excesses. They were pretty visible to the naked eye.

Greece is a different issue. We’re not involved. We don’t trade sovereign debt, we don’t trade CDSes. You know I feel bad for my mother country in that they’re going through a lot of austerity now and I actually think that the Prime Minister and his team are doing the right thing. I met with them recently, actually, in Washington [DC] and they gave a pretty rational response to a problem that they, quite frankly, inherited.

You know they came in and discovered the hole in the budget deficit and discovered a lot of the off balance sheet stuff that was not of their doing. And he’s taking the politically unpopular step of extending the retirement age and cutting government wages not knowing if it’s going to be enough and so far the market is pretty skeptical, but I think the Greek government is being more courageous than some of the other western-European governments who aren’t addressing these issues and are going to be facing these same problems like Greece down the road. So Greece is a prelude to the problems that a lot of other countries will face that have made promises to their people without the ability to pay for them.

Timmy-Gate: Did Geithner Help Hide Lehman’s Fraud?

March 16, 2010 by Infinite

Timmy-Gate Takes a Turn For The Worse: Did Geithner Help Lehman Hide Accounting Tricks?

Timothy Geithner at the Council on Foreign Relations

By L. Randall Wray

L. Randall Wray, Ph.D. is Professor of Economics at the University of Missouri-Kansas City, Research Director with the Center for Full Employment and Price Stability and Senior Research Scholar at The Levy Economics Institute. His research expertise is in: financial instability, macroeconomics, and full employment policy.

Just when you thought that nothing could stink more than Timothy Geithner’s handling of the AIG bailout, a new report details how Geithner’s New York Fed allowed Lehman Brothers to use an accounting gimmick to hide debt. The report, which runs to 2200 pages, was released by Anton Valukas, the court-appointed examiner. It actually makes the AIG bailout look tame by comparison. It is now crystal clear why Geithner’s Treasury as well as Bernanke’s Fed refuse to allow any light to shine on the massive cover-up underway.

Recall that the New York Fed arranged for AIG to pay one hundred cents on the dollar on bad debts to its counterparties-benefiting Goldman Sachs and a handful of other favored Wall Street firms. (see here) The purported reason is that Geithner so feared any negative repercussions resulting from debt write-downs that he wanted Uncle Sam to make sure that Wall Street banks could not lose on bad bets. Now we find that Geithner’s NYFed supported Lehman’s efforts to conceal the extent of its problems. (see here) Not only did the NYFed fail to blow the whistle on flagrant accounting tricks, it also helped to hide Lehman’s illiquid assets on the Fed’s balance sheet to make its position look better. Note that the NY Fed had increased its supervision to the point that it was going over Lehman’s books daily; further, it continued to take trash off the books of Lehman right up to the bitter end, helping to perpetuate the fraud that was designed to maintain the pretense that Lehman was not massively insolvent. (see here)

Geithner told Congress that he has never been a regulator. (see here) That is a quite honest assessment of his job performance, although it is completely inaccurate as a description of his duties as President of the NYFed. Apparently, Geithner has never met an accounting gimmick that he does not like, if it appears to improve the reported finances of a Wall Street firm. We will leave to the side his own checkered past as a taxpayer, although one might question the wisdom of appointing someone who is apparently insufficiently skilled to file accurate tax returns to a position as our nation’s chief tax collector. What is far more troubling is that he now heads the Treasury – which means that he is not only responsible for managing two regulatory units (the FDIC and OCC), but also that he has got hold of the government’s purse strings. How many more billions or trillions will he commit to a futile effort to help Wall Street avoid its losses?

When The Gun Is In YOUR Mouth…. (CDS / Merkel)

March 11, 2010 by Infinite

… suddenly politicians “get religion” about making damn sure it has no bullets in it:

“We’re of the opinion that a quick implementation of actions in the area of CDS has to happen,” Merkel said. Citing “ongoing speculation against euro-region countries,” she called for the “fastest possible” implementation of new rules. Europe must “do everything to avoid unhealthy speculation,” said Juncker, who heads the euro-area finance ministers group.

Where ‘ya been Angie?

Oh, and you too Papandreou:

“Europe and America must say ‘enough is enough’ to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system,” Papandreou said yesterday in a speech in Washington.

And, of course, Sarkozy.

Note that I’ve been calling for these things to be either exchange-traded with central counterparty “blinding” (on purpose) as is the case with the regulated option and futures markets or be torn up since The Ticker began publication.

Why? Because it is my position and remains so that unless you have this sort of market these contracts are all a scam.

They are a scam because:

Goldman Sucks

March 9, 2010 by Infinite

Added: 3. März 2010

Marc Faber on CNN: The Patient is Already Dead

March 9, 2010 by Infinite

Date: 7th Mar 10

Washington Must Ban US Credit Derivatives as Traders Demand Gold

March 8, 2010March 8, 2010 by Infinite

Congress should act immediately to abolish credit default swaps on the United States, because these derivatives will foment distortions in global currencies and gold. Failure to act now will only mean the U.S. will be forced to act after these “financial weapons of mass destruction” levy heavy casualties. These obligations now settle in euros, but the end game is to settle them in gold. This is so ripe for speculative manipulation that you might as well cover the U.S. map with a bull’s-eye.

Credit default swaps are not insurance. If you buy fire insurance on your home, you must own the house. If you buy credit protection on the United States, however, you do not need to own U.S. Treasury bonds. If your protection gains value after you buy it — not because the U.S. defaults, but because of market mood changes — you can resell that protection and make a profit.

Lower credit risk means a lower price for protection. Zero implies zero risk. The higher the basis points, the higher the implied risk. When U.S. credit default swaps were first introduced, the price of protection was around two basis points. According to Bloomberg, the price for five-year protection was around 38 basis points (per annum) on Friday. But the price in the over-the-counter market — where this stuff actually trades — was almost double or around 75 basis points.

Since most traders in U.S. credit default swaps don’t think the U.S. will default any time soon, why are they trading U.S. credit default swaps? They are speculating on price movements the way a day trader buys and sells stocks to speculate on stock price movements.

Volume in U.S. credit default swaps is relatively small, but it can explode rapidly, just as volume expanded rapidly for credit default swaps on mortgage debt in 2006 and 2007.

Speculators Want U.S. CDS Payoffs in Gold

Remember AIG? When prices moved against AIG on its credit default swap contracts, AIG owed cash (collateral) to its trading partners. AIG paid billions of dollars and owed billions more when U.S. taxpayers bailed it out in September 2008.

U.S. credit default swaps currently trade in euros. After all, if the U.S. defaults, who will want payment in devalued U.S. dollars? The euro recently weakened relative to the dollar, and market participants are calling for contracts that require payment in gold. If they get their way, speculators on the winning side of a price move will demand collateral paid in gold.

Secret AIG Document Shows That Goldman Sachs Minted Most Toxic CDOs

February 23, 2010 by Infinite

The building that will house the new headquarters of Goldman Sachs Group Inc. beginning in March, stands at 200 West Street in New York, U.S., on Jan. 20, 2010. Photographer: JB Reed/Bloomberg

Feb. 23 (Bloomberg) — When a congressional panel convened a hearing on the government rescue of American International Group Inc. in January, the public scolding of Treasury Secretary Timothy F. Geithner got the most attention.

Lawmakers said the former head of the New York Federal Reserve Bank had presided over a backdoor bailout of Wall Street firms and a coverup. Geithner countered that he had acted properly to avert the collapse of the financial system.

A potentially more important development slipped by with less notice, Bloomberg Markets reports in its April issue. Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG.

These were the deals that pushed the insurer to the brink of insolvency — and were eventually paid in full at taxpayer expense. The New York Fed, which secretly engineered the bailout, prevented the full publication of the document for more than a year, even when AIG wanted it released.

That lack of disclosure shows how the government has obstructed a proper accounting of what went wrong in the financial crisis, author and former investment banker William Cohan says. “This secrecy is one more example of how the whole bailout has been done in such a slithering manner,” says Cohan, who wrote “House of Cards” (Doubleday, 2009), about the unraveling of Bear Stearns Cos. “There’s been no accountability.”

CDOs Identified

Matt Taibbi: Wall Street’s Bailout Hustle

February 19, 2010February 19, 2010 by Infinite

Goldman Sachs and other big banks aren’t just pocketing the trillions we gave them to rescue the economy – they’re re-creating the conditions for another crash

On January 21st, Lloyd Blankfein left a peculiar voicemail message on the work phones of his employees at Goldman Sachs. Fast becoming America’s pre-eminent Marvel Comics supervillain, the CEO used the call to deploy his secret weapon: a pair of giant, nuclear-powered testicles. In his message, Blankfein addressed his plan to pay out gigantic year-end bonuses amid widespread controversy over Goldman’s role in precipitating the global financial crisis.

The bank had already set aside a tidy $16.2 billion for salaries and bonuses – meaning that Goldman employees were each set to take home an average of $498,246, a number roughly commensurate with what they received during the bubble years. Still, the troops were worried: There were rumors that Dr. Ballsachs, bowing to political pressure, might be forced to scale the number back. After all, the country was broke, 14.8 million Americans were stranded on the unemployment line, and Barack Obama and the Democrats were trying to recover the populist high ground after their bitch-whipping in Massachusetts by calling for a “bailout tax” on banks. Maybe this wasn’t the right time for Goldman to be throwing its annual Roman bonus orgy.

Not to worry, Blankfein reassured employees. “In a year that proved to have no shortage of story lines,” he said, “I believe very strongly that performance is the ultimate narrative.”

Translation: We made a shitload of money last year because we’re so amazing at our jobs, so fuck all those people who want us to reduce our bonuses.

Goldman wasn’t alone. The nation’s six largest banks – all committed to this balls-out, I drink your milkshake! strategy of flagrantly gorging themselves as America goes hungry – set aside a whopping $140 billion for executive compensation last year, a sum only slightly less than the $164 billion they paid themselves in the pre-crash year of 2007. In a gesture of self-sacrifice, Blankfein himself took a humiliatingly low bonus of $9 million, less than the 2009 pay of elephantine New York Knicks washout Eddy Curry. But in reality, not much had changed. “What is the state of our moral being when Lloyd Blankfein taking a $9 million bonus is viewed as this great act of contrition, when every penny of it was a direct transfer from the taxpayer?” asks Eliot Spitzer, who tried to hold Wall Street accountable during his own ill-fated stint as governor of New York.

Beyond a few such bleats of outrage, however, the huge payout was met, by and large, with a collective sigh of resignation. Because beneath America’s populist veneer, on a more subtle strata of the national psyche, there remains a strong temptation to not really give a shit. The rich, after all, have always made way too much money; what’s the difference if some fat cat in New York pockets $20 million instead of $10 million?

The only reason such apathy exists, however, is because there’s still a widespread misunderstanding of how exactly Wall Street “earns” its money, with emphasis on the quotation marks around “earns.” The question everyone should be asking, as one bailout recipient after another posts massive profits – Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation – is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.

Wall Street Is A High-On-Crack Driver That Just Smashed Into Your House

February 15, 2010 by Infinite

Compared to Wall Street the US government and the Fed nuked the economy, the dollar and any bright future that the people in the US might have had. The people will experience the fallout very soon.

The ‘Greatest Depression’.

Cynthia McKinney is spot-on :

– Cynthia McKinney at Munich Germany NATO Peace Rally: ‘My Country Has Been Hijacked By A Criminal Cabal’

(This guest post comes from Tavakoli Structured Finance)

If a high-on-crack driver crashed his speeding rental car into your house and killed your spouse, you would be outraged if law enforcers took bribes and gave the driver a pass on a blood test. If the judge then merely fined the killer and ordered you to pay it, you would appeal, wondering what happened to justice. If the government then handed the crack-driver keys to a bigger rental car and presented you with the rental bill, you would certainly protest.

How is it, then, that you have remained largely silent in the face of the same sort of behavior by Wall Street and Washington? Bonus-seeking bankers careened off the right path and ran Ponzi schemes that nearly ruined our economy. Bureaucrats and elected officials bailed them out without demanding consequences. Bankers are revving their engines again.

Bankers Get Bonuses, the USA Gets the Great Recession

Taxpayers are asked to believe that over-borrowing by U.S. consumers created a global financial crisis. This myth aids and abets Wall Street. The economy was nearly destroyed because banks borrowed massively, and they borrowed many multiples more than they could afford. Wall Street pumped the Fed’s cheap money through financial meth labs, and deceptive financial vehicles ran over securities laws at top speed.

More than 20% of mortgage loans–including originally sound loans–are underwater, meaning the borrower owes more than the home is worth. Official unemployment numbers hover at around 10%. If you include underemployment, it is around 18%. In depressed areas where the nation’s poorest–chiefly minorities–have been hurt the most, unemployment has soared past 30%. For this destitute group, unemployment combined with underemployment exceeds 50%.

As U.S. soldiers fought wars in Iraq and Afghanistan, Wall Street flattened Main Street. Our foreign wars drag on, while the U.S. battles a crippling recession at home.

Global Ponzi Scheme

Fraud by borrowers, fraud on borrowers, and speculation by people who thought home prices would rise forever have all tarnished mortgage lending. Yet this pales compared to the epidemic of predatory lending.

Predatory snipers committed financial murder as deliberately as British soldiers sold smallpox contaminated blankets to Native Americans. Honest homeowners were systematically targeted and actively misled into bad mortgage products. Loans were presented as gifts, but these Trojan horse loans hid destructive risk. “Disclosures” were acts of malice.

When Wall Street packaged these loans and sold deceptive “investments,” documents did not specifically disclose that credit ratings were misleading. If you know or should know a car’s gas tank will blow up, you cannot use a misleading third-party consumer report as an excuse. Yet bonus-seeking bankers used this sort of excuse to get through a few more highly-paid bonus cycles, before it all fell apart. Only the elite crowd of insiders prospered.*

This was the most massive Ponzi scheme in the history of the global capital markets. U.S. taxpayers became unwilling unsophisticated investors when we bailed out the financial system. We must hold Wall Street accountable for its fraud.

The CDS Puppetmaster Behind It All And The Ever Increasing Parallels Between AIG And Greece

February 9, 2010 by Infinite

Goldman Sachs

David Fiderer’s below piece, originally published on the Huffington Post, continues probing the topic of Goldman and AIG. For all intents and purposes the debate has been pretty much exhausted and if there was a functioning legal system, Goldman would have been forced long ago to pay back the cash it received from ML-3 (which in itself should have been long unwound now that plans to liquidate AIG have been scrapped) and to have the original arrangement reestablished (including the profitless unwind of AIG CDS the firm made improper billions on, by trading on non-public, pre-March 2009, information), and now that AIG is solvent courtesy of the government, so too its counterparties can continue experiencing some, albeit marginal, risk, instead of enjoying the possession of cold hard cash. Oh, and Tim Geithner would be facing civil and criminal charges.

Yet as we look forward, we ask, who now determines the variation margin on Greek CDS (and Portugal, and Dubai, and Spain, and, pretty soon, Japan and the US), the associated recovery rate, and how much collateral should be posted by sellers of Greek protection? If Greek banks, as the rumors goes, indeed sold Greek protection, and, as the rumor also goes, Goldman was the bulk buyer, either in prop or flow capacity, it is precisely Goldman, just like in the AIG case, that can now dictate what the collateral margin that Greek counterparties, and by extension the very nation of Greece, have to post on billions of dollars of Greek insurance. Let’s say Goldman thinks Greece’s debt recovery is 75 cents and the CDS should be trading at 700 bps, instead of the “prevailing” consensus of a 90 recovery and 450 spread, then it will very likely get its way when demanding extra capital to cover potential shortfalls, since Goldman itself has been instrumental in covering up Greece’s catastrophic financial state and continues to be a critical factor in any future refinancing efforts on behalf of Greece. Obviously this incremental margin, which only Goldman will ever see, even if the CDS was purchased on a flow basis, will never be downstreamed on behalf of its clients, and instead will be used to [buy futures|buy steepeners|prepay 2011 bonuses|buy more treasuries for the BONY $60 billion Treasury rainy day fund].

In essence, through its conflict of interest, its unshakable negotiating position, and its facility to determine collateral requirements and variation margin, Goldman can expand its previous position of strength from dictating merely AIG and Federal Reserve decision making, to one which determines sovereign policy! This is unmitigated lunacy and a recipe for financial collapse at the global level.

This is yet another AIG in the making, with Goldman this time likely threatening to accelerate the collapse not merely of the US financial system, but of the global one, in order to attain virtually infinite negotiating leverage. Of course, the world will not allow a Greece-initiated domino, allowing Goldman to call everyone’s bluff once again.

On the Edge with Max Keiser: Guest Catherine Austin Fitts (06 Feb. 2010)

February 6, 2010 by Infinite

Between 1997 & 2002 $4 Trillion Went Missing From US Government

1 of 3:

2 of 3:

3 of 3:

Secret Banking Cabal Emerges From AIG Shadows

January 29, 2010 by Infinite

Jan. 29 (Bloomberg) — The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system — apart from the matter of AIG’s bailout — deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System

Rep. Marcy Kaptur Chews up Timothy Geithner

January 28, 2010 by Infinite

Added: 28th Jan 10

Timothy Geithner does not want Americans to know who really controls and is behind the Federal Reserve.

The elite created the Fed. The same elite also controls the US government.

‘The Federal Reserve is above the law’. (Google that!)

– SEC Mulled National Security Status For AIG Bailout Details (Reuters)

– Rep. John Mica encourages Treasury Secretary Geithner to resign (CNBC)

– America’s Impending Master Class Dictatorship! (Kitco)

– Ron Paul on FOX NEWS: Wall Street Bailout FRAUD

– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street (RT)

– Senator Jim Bunning: SEC Should Probe NY Fed Staff Over AIG (Bloomberg)

– SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets (Bloomberg/Reuters)

– Timothy Geithner’s Fed Told AIG to Limit Swaps Disclosure (Bloomberg)

– Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury (CNBC):

“Mr. Geithner has been wrong about everything for the last 15 years.”

– Congressman Michael Burgess To Timothy Geithner: ‘You Should Have Never Been Hired’ (FOX NEWS)

– Prof. William Black: Timothy Geithner ‘Burned Billions,’ Shafted Taxpayers on CIT Loan (Yahoo Finance)

– New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money (Bloomberg)

– Rep. Brad Sherman: Geithner rejects $1 trillion limit on bailout power (Section 1204 is unlimited in dollar amount!) (The Hill)

– Treasury Secretary Geithner’s Closest Aides Reaped Millions Working for Banks, Hedge Funds (Bloomberg)

– The Federal Reserve buys Fannie Mae bonds; Timothy Geithner is a liar (CNBC)

– Dennis Kucinich: Federal Reserve No More “Federal” Than Federal Express!

Rep. John Mica encourages Treasury Secretary Geithner to resign

January 27, 2010 by Infinite

Added: 27. Januar 2010

– SEC Mulled National Security Status For AIG Bailout Details (Reuters)

– America’s Impending Master Class Dictatorship! (Kitco)

– Ron Paul on FOX NEWS: Wall Street Bailout FRAUD

– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street (RT)

– Senator Jim Bunning: SEC Should Probe NY Fed Staff Over AIG (Bloomberg)

– SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets (Bloomberg/Reuters)

– Timothy Geithner’s Fed Told AIG to Limit Swaps Disclosure (Bloomberg)

– Famous Investor Jim Rogers: Incompetence In Washington, Abolish The Fed And The Treasury (CNBC):

“Mr. Geithner has been wrong about everything for the last 15 years.”

– Congressman Michael Burgess To Timothy Geithner: ‘You Should Have Never Been Hired’ (FOX NEWS)

– Prof. William Black: Timothy Geithner ‘Burned Billions,’ Shafted Taxpayers on CIT Loan (Yahoo Finance)

– New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money (Bloomberg)

– Rep. Brad Sherman: Geithner rejects $1 trillion limit on bailout power (Section 1204 is unlimited in dollar amount!) (The Hill)

– Treasury Secretary Geithner’s Closest Aides Reaped Millions Working for Banks, Hedge Funds (Bloomberg)

– The Federal Reserve buys Fannie Mae bonds; Timothy Geithner is a liar (CNBC)

SEC Mulled National Security Status For AIG Bailout Details

January 25, 2010 by Infinite

NEW YORK (Reuters) – U.S. securities regulators originally treated the New York Federal Reserve’s bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security, according to emails obtained by Reuters.

Crisis in Credit

The request to keep the details secret were made by the New York Federal Reserve — a regulator that helped orchestrate the bailout — and by the giant insurer itself, according to the emails.

The emails from early last year reveal that officials at the New York Fed were only comfortable with AIG submitting a critical bailout-related document to the U.S. Securities and Exchange Commission after getting assurances from the regulatory agency that “special security procedures” would be used to handle the document.

The SEC, according to an email sent by a New York Fed lawyer on January 13, 2009, agreed to limit the number of SEC employees who would review the document to just two and keep the document locked in a safe while the SEC considered AIG’s confidentiality request.

The SEC had also agreed that if it determined the document should not be made public, it would be stored “in a special area where national security related files are kept,” the lawyer wrote.

In another email, a New York Fed official said the SEC suggested in late December 2008, that AIG file the document under seal and then apply to the regulatory agency for so-called confidential treatment, if central bankers wanted to stop the information from becoming public.

The emails were included in the mountain of documents the New York Fed turned over last week to the House Committee on Oversight and Government Reform, which will hold a hearing Wednesday into the AIG bailout and the New York Fed’s role in trying keep the specific terms of that Fed-engineered rescue in November 2008, from being made public.

More than a year later, the Fed’s bailout of AIG remains controversial because it funneled nearly $70 billion to 16 big U.S. and European banks that had bought credit default swaps from AIG. Banks like Goldman Sachs Group Inc, Societe Generale and Deutsche Bank had bought those insurance-like derivatives to guard against defaults on hundreds of securities backed by subprime mortgages.

‘BACKDOOR BAILOUT’

Lawmakers on Capitol Hill have labeled the AIG bailout, in which the New York Fed created a special entity to purchase those securities from the banks at essentially their face value, a “backdoor bailout” for the 16 financial institutions.

Ron Paul on FOX NEWS: Wall Street Bailout FRAUD

January 19, 2010 by Infinite

Criminals we can believe in!

– The No.1 Trend Forecaster Gerald Celente: Financial Mafia Controlling US and Wall Street

Added: 19th Jan 2010

– SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets (Bloomberg/Reuters)

– Timothy Geithner’s Fed Told AIG to Limit Swaps Disclosure (Bloomberg)

– New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money (Bloomberg)

– How Goldman Sachs Made Tens Of Billions From The Economic Collapse Of America In Four Easy Steps

– Senator Jim Bunning Slams Fed Chairman Ben Bernanke (C-SPAN)

Senator Jim Bunning: SEC Should Probe NY Fed Staff Over AIG

January 14, 2010 by Infinite

The U.S. Securities and Exchange Commission seal is displayed outside the headquarters in Washington (Bloomberg)

Jan. 11 (Bloomberg) — The U.S. Securities and Exchange Commission should investigate whether employees of the Federal Reserve Bank of New York violated laws on corporate disclosure when they asked American International Group Inc. to withhold information from public filings, a Republican lawmaker said.

“I urge you to investigate the apparent violations of the securities laws regarding AIG disclosures,” including the actions of New York Fed staff, U.S. Senator Jim Bunning of Kentucky wrote in a letter today to SEC Chairman Mary Schapiro.

Don’t miss:

– SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets (Bloomberg/Reuters)

– Timothy Geithner’s Fed Told AIG to Limit Swaps Disclosure (Bloomberg)

– New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money (Bloomberg)

– How Goldman Sachs Made Tens Of Billions From The Economic Collapse Of America In Four Easy Steps

– Senator Jim Bunning Slams Fed Chairman Ben Bernanke (C-SPAN)

AIG submitted a draft regulatory filing to the New York Fed disclosing it paid banks 100 cents on the dollar for credit- default swaps they purchased from the insurer, according to documents released last week by U.S. Representative Darrell Issa. The New York Fed crossed out the reference and AIG dropped the disclosure in a December 2008 filing, e-mails between the insurer and regulator show.

The decision to pay full value on the swap contracts to counterparties including Goldman Sachs Group Inc. and Societe Generale SA “provided a strong motive for the apparent cover- up,” wrote Bunning, the top Republican on a Senate subcommittee that oversees the SEC. SEC spokesman John Nester declined to comment on Bunning’s request for an investigation.

SEC hides AIG bailout documents until 2018; Federal Reserve Seeks to Protect US Bailout Secrets

January 14, 2010 by Infinite

– Federal Reserve Seeks to Protect U.S. Bailout Secrets (Bloomberg):

Jan. 11 (Bloomberg) — The Federal Reserve asked a U.S. appeals court to block a ruling that for the first time would force the central bank to reveal secret identities of financial firms that might have collapsed without the largest government bailout in U.S. history.

The U.S. Court of Appeals in Manhattan will decide whether the Fed must release records of the unprecedented $2 trillion U.S. loan program launched after the 2008 collapse of Lehman Brothers Holdings Inc. In August, a federal judge ordered that the information be released, responding to a request by Bloomberg LP, the parent of Bloomberg News.

“This case is about the identity of the borrower,” said Matthew Collette, a lawyer for the government, in oral arguments today. “This is the equivalent of saying ‘I want all the loan applications that were submitted.’”

Bloomberg argues that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money. Banks and the Fed warn that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell-off by investors. Disclosure may hamstring the Fed’s ability to deal with another crisis, they also argued. The lower court agreed with Bloomberg.

* SEC granted “confidential treatment” last May

* Secrecy order stays in place until November 2018

NEW YORK, Jan 11 (Reuters) – It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group because of an action taken last year by the Securities and Exchange Commission.

In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs, Deutsche Bank and Merrill Lynch.

The SEC’s Division of Corporation Finance, in granting AIG’s request for confidential treatment, said the “excluded information” will not be made public until Nov. 25, 2018, according to a copy of the agency’s May 22 order.

The SEC said the insurer had demonstrated the information in the exhibit, called Schedule A, “qualifies as confidential commercial or financial information.”

The expiration date for the SEC order falls on the 10th anniversary of Federal Reserve of New York’s decision to provide emergency financing to an entity set up to specifically acquire some $60 billion in collateralized debt obligations from 16 banks in the United States and Europe.

Timothy Geithner’s Fed Told AIG to Limit Swaps Disclosure

January 8, 2010 by Infinite

See this:
– New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money (Bloomberg)

Timothy Geithner, U.S. treasury secretary, speaks at a Congressional Oversight Panel on the Troubled Asset Relief Program (TARP), in Washington, D.C. (Bloomberg)

Jan. 7 (Bloomberg) — The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”

Geithner Had ‘No Role’ (Sure!!!)

“Secretary Geithner played no role in these decisions,” Meg Reilly, a Treasury spokeswoman, said in an e-mail. “He was recused from working on issues involving specific companies, including AIG,” after his nomination for Treasury secretary on Nov. 24, 2008. Geithner “began to insulate himself weeks earlier in anticipation of his nomination,” she said in a separate statement.

Geithner, who was tapped by President Barack Obama, took the Treasury job in January, 2009. Mark Herr, a spokesman for New York-based AIG, declined to comment.

Responding to Goldman Sachs Banksters

December 31, 2009 by Infinite

The New York Times published a Christmas Eve expose of Goldman Sachs’s so-called “Abacus” synthetic collateralized debt obligations (CDOs). They were created with credit derivatives instead of cash securities. Goldman used credit derivatives to create short bets that gain in value when CDOs lose value. Goldman did this for both protection and profit and marketed the idea to hedge funds.

Goldman responded to the New York Times saying many of these deals were the result of demand from investing clients seeking long exposure. In an earlier Huffington Post article, I wrote about Goldman’s key role in the AIG crisis; it traded or originated $33 billion of AIG’s $80 billion CDOs. AIG was long the majority of six of Goldman’s Abacus deals. These value-destroying CDOs were stuffed with BBB-rated (the lowest “investment grade” rating) portions of other deals. These BBB-rated portions were overrated from the start. Many of them eventually exploded like firecrackers.

Goldman said it suffered losses due to the deterioration of the housing market and disclosed $1.7 billion in residential mortgage exposure write-downs in 2008. These losses would have been substantially higher had it not hedged. Goldman describes its activities as prudent risk management. Many Wall Street firms wound up taking losses. The question is, however, how did they manage to get through a couple of bonus cycles without taking accounting losses while showing “profits?”

The answer is that they sold a lot of “hot air” disguised as valuable securities. Goldman claims this was prudent risk management. In reality, Goldman created products that it knew or should have known were overrated and overpriced.

If Wall Street had not manufactured value-destroying securities and related credit derivatives, the money supply for bad loans would have been choked off years earlier. Instead, Wall Street was chiefly responsible for the “financial innovation” that did massive damage to the U.S. economy.

Senator Jim Bunning Slams Fed Chairman Ben Bernanke

December 4, 2009 by Infinite

The elite is destroying America. This is all planned. Obama and Bernanke are puppets of the elite.

America will experience the greatest intentionally created economic/financial collapse in world history.

This is a ‘controlled demolition‘ and it is most probably too late now to do anything about it, except to prepare yourself for a hyperinflationary depression, the ‘Greatest Depression’ in world history.

Take a look at what happened in Rome, Weimar, Iceland, Zimbabwe and North Korea. Learn from history and prepare for the worst.

The real crisis has only just begun.

– Paul Craig Roberts: The Obama Puppet – The World’s Least Powerful Man

– What Recovery? US Consumers Getting ‘Dramatically Worse,’ Howard Davidowitz Says

– US: The Real Unemployment Rate Is Now 22 Percent

– Change: 71% are Angry, 46% are Very Angry at Federal Government (Rasmussen Reports)

– Food Stamp program now expanding at a pace of about 20,000 people a day; In 239 counties at least a quarter of the population receives food stamps

– Ben Bernanke: ‘Auditing the Fed would seriously impair the prospects for economic and financial stability in the US’

– US Treasury Report: Banks Are Cutting Back on Small Business Loans, $10 Billion Evaporates

– The Federal Reserve Doesn’t Want Banks to Increase Lending, Because of Inflation

– US Government Is Facing Wave of Debt Payments

“Rather than making management, shareholders, and debt holders feel the consequences of their risk-taking, you bailed them out. In short, you are the definition of moral hazard.”

“Because you bowed to pressure from the banks and refused to resolve them or force them to clean up their balance sheets and clean out the management, you have created zombie banks that are only enriching their traders and executives.”

Added: 03. December 2009

New York Fed’s Secret Choice to Pay for AIG Swaps Squandered Billions of Taxpayer Money

October 28, 2009 by Infinite

Here is what Timmy, Benny and the boys did to sponsor Goldman Sachs, Deutsche Bank, Societe Generale and other banksters:

“…the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department and Chairman Ben S. Bernanke’s Federal Reserve.”

“After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.”

WTF have they (Timmy, Benny and the boys) done?

Janet Tavakoli, founder of Chicago-based Tavakoli Structured Finance Inc., a financial consulting firm, says the government squandered billions in the AIG deal.

“There’s no way they should have paid at par,” she says. “AIG was basically bankrupt.”

Far more money was wasted in paying the banks for their swaps, says Donn Vickrey of financial research firm Gradient Analytics Inc. “In cases like this, the outcome is always along the lines of 50, 60 or 70 cents on the dollar,” Vickrey says.

Why have they done it?

One reason par was paid was because some counterparties insisted on being paid in full and the New York Fed did not want to negotiate separate deals, says a person close to the transaction. “Some of those banks needed 100 cents on the dollar or they risked failure,” Vickrey says.

For Timmy fans:
– The Federal Reserve buys Fannie Mae bonds; Timothy Geithner is a liar
– Treasury Secretary Geithner’s Closest Aides Reaped Millions Working for Banks, Hedge Funds

Timothy Geithner, U.S. treasury secretary, testifies at a House Appropriations Committee hearing in Washington, D.C.

Oct. 27 (Bloomberg) — In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.

Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter.

Among AIG’s bank counterparties were New York-based Goldman Sachs Group Inc. and Merrill Lynch & Co., Paris-based Societe Generale SA and Frankfurt-based Deutsche Bank AG.

By Sept. 16, 2008, AIG, once the world’s largest insurer, was running out of cash, and the U.S. government stepped in with a rescue plan. The Federal Reserve Bank of New York, the regional Fed office with special responsibility for Wall Street, opened an $85 billion credit line for New York-based AIG. That bought it 77.9 percent of AIG and effective control of the insurer.

The government’s commitment to AIG through credit facilities and investments would eventually add up to $182.3 billion.

Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department and Chairman Ben S. Bernanke’s Federal Reserve. Geithner’s team circulated a draft term sheet outlining how the New York Fed wanted to deal with the swaps — insurance-like contracts that backed soured collateralized-debt obligations.

Subprime Mortgages

CDOs are bundles of debt including subprime mortgages and corporate loans sold to investors by banks.

Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.

Fall Of The Republic – The Presidency Of Barack H. Obama (The Full Movie HQ)

October 23, 2009October 23, 2009 by Infinite

“When the people find they can vote themselves money, that will herald the end of the republic.”
– Benjamin Franklin

Added: 22. October 2009

Fall Of The Republic documents how an offshore corporate cartel is bankrupting the US economy by design. Leaders are now declaring that world government has arrived and that the dollar will be replaced by a new global currency.

President Obama has brazenly violated Article 1 Section 9 of the US Constitution by seating himself at the head of United Nations’ Security Council, thus becoming the first US president to chair the world body.

A scientific dictatorship is in its final stages of completion, and laws protecting basic human rights are being abolished worldwide; an iron curtain of high-tech tyranny is now descending over the planet.

A worldwide regime controlled by an unelected corporate elite is implementing a planetary carbon tax system that will dominate all human activity and establish a system of neo-feudal slavery.

Government Watchdog: Treasury and Federal Reserve Knew Bailed-Out Banks Were Not Healthy, Lying to Americans

October 5, 2009 by Infinite

If people trust the US government and the Federal Reserve, then they are doomed and they deserve it, because they haven’t done they research.

Why would you trust somebody that has been caught lying and stealing almost all of the time?

Why would you trust somebody that has brought down the value of the US dollar to 5 cents compared to 1913, when the Federal Reserve banksters took over?

Why would you trust somebody that has stolen essentially 95% of your money?

Why would you trust somebody that threatens with an economic meltdown if you would take a look into their books?

Senior Officials Had Financial Concerns About Nine Bank Instiutions Receiving TARP Funds

The chief watchdog for the government’s $700 billion bailout program says federal officials were trying to contain the worst financial crisis in decades last year with the Troubled Asset Relief Program, but they had concerns about the bank institutions’ financial health. (ABC News Photo Illustration)

The Treasury Department and the Federal Reserve lied to the American public last fall when they said that the first nine banks to receive government bailout funds were healthy, a government watchdog states in a new report released today.

Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (SIGTARP), says that despite multiple statements on Oct. 14 of last year that these nine banks were healthy and only receiving government funds for the good of the country’s economy, federal officials knew otherwise.

“Contemporaneous reports and officials’ statements to SIGTARP during this audit indicate that there were concerns about the health of several of the nine institutions at that time and, as detailed in this report, that their overall selection was far more a result of the officials’ belief in their importance to a system that was viewed as being vulnerable to collapse than concerns about their individual health and viability,” Barofsky says.

Last October, the government was in the midst of trying to contain the worst financial crisis in decades. On Sept. 7, 2008, mortgage giants Fannie Mae and Freddie Mac were placed under conservatorship. On Sept. 15, the massive investment bank Lehman Brothers filed for bankruptcy. The next day, insurance giant AIG needed an $85 billion government loan to avoid collapse.

On Oct. 13, after Congress had passed the $700 billion financial bailout program earlier that month, Treasury provided capital injections for nine institutions that together held over $11 trillion in assets: Bank of America, Citigroup, Wells Fargo, JP Morgan Chase, Goldman Sachs, Morgan Stanley, Merrill Lynch, State Street and the Bank of New York Mellon. As of June 2008, these nine banks accounted for around 75 percent of all assets held by U.S. banks.

In announcing the initial $125 billion provided to these banks, former Treasury Secretary Hank Paulson on Oct. 14 said, “These are healthy institutions, and they have taken this step for the good of the U.S. economy. As these healthy institutions increase their capital base, they will be able to increase their funding to U.S. consumers and businesses.”

That same day, the Treasury Department, the Federal Reserve and the FDIC also released a joint statement reiterating that “these healthy institutions are taking these steps to strengthen their own positions and to enhance the overall performance of the US economy.”