When Treasury Secretary Hank Paulson held his secret meeting at the New York Federal Reserve Bank in response to super-insurer A.I.G.’s plea for help two weeks ago, he brought a friend:
The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern.
Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.
And why would Paulson’s successor at the helm of Goldman Sachs be permitted to attend a meeting where the decision was made to let uber-rival investment bank Lehman Brothers fail and have the federal government rescue A.I.G.?
Few knew of Goldman’s exposure to A.I.G. When the insurer’s flameout became public, David A. Viniar, Goldman’s chief financial officer, assured analysts on Sept. 16 that his firm’s exposure was “immaterial,” a view that the company reiterated in an interview.
Later that same day, the government announced its two-year, $85 billion loan to A.I.G., offering it a chance to sell its assets in an orderly fashion and theoretically repay taxpayers for their trouble. The plan saved the insurer’s trading partners but decimated its shareholders.
But don’t the American people have the right to know the answer to questions about these meetings before our representatives decide to hand over a trillion dollars to these discredited Masters of the Universe? Or should our legislators take statements like this at face value?
Regarding Mr. Blankfein’s presence at the Fed during talks about an A.I.G. bailout, he said: “I think it would be a mistake to read into it that he was there because of our own interests. We were engaged because of the implications to the entire system.”
Mr. van Praag declined to comment on what communications, if any, took place between Mr. Blankfein and the Treasury secretary, Mr. Paulson, during the bailout discussions.
A Treasury spokeswoman declined to comment about the A.I.G. rescue and Goldman’s role. The government recently allowed Goldman to change its regulatory status to help bolster its finances amid the market turmoil.
Mr. van Praag might not work for the United States of America (yet, the week is very young) but I’d sure like to hear some answers from the Treasury department. Their spokeswoman needs to understand who she works for, as does her boss, Hank Paulson.
The American people deserve answers to these questions. We demand them now.
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OT: Max Blumenthal, fresh back from Alaska, is up in a minute or two from KPFK, streaming from Los Angeles.
bernhard on this topic yesterday said:
i’m so glad we had comprehensive congressional hearings last week, so that all this was uncovered and explained publicly. /sn
Friends don’t let friends drive while poor. Where’s MY bailout?
posting this info again, as i left in epu-land several threads ago:
the place to watch for house action on the bill is the house rules committee website. special rules and notices of action are reported here:
http://www.rules.house.gov/special_rules.aspx
http://www.rules.house.gov/rules_news.aspx
the most recent one was reported out yesterday at 5:55pm:
amendments submitted by the minority (requiring 6 hours notice and others) were defeated along party line votes.
looks like the house will be trying to vote today or tomorrow?
Hank Paulson is a lame duck, who in four months will be re-joining the industry to which he will in the interim dispense hundreds of billions of the people’s dollars. Can we all say “conflict of interest”?
thanks Teddy. That was my very first question when all this was going down. why this bank and not this one? My hunch was that it depended on who had which friends where, not on any objective and verifiable formula.
I can. and why should we trust these hosers as the “experts” when they are clearly players in this game, not referees?
This administration believes in trickle down theories. With regard to the
sleaze I have to agree with them.
Can we all say “conflict of interest”?
Nah – I’m tired of that song….
The death of Lehman certainly leaves a wider field open for Goldman, even though it was turned into a regular bank the following week. I have no idea how to track investment bank customers, but once the credit markets function again, it would be fun to know if Lehman’s former customers go to Goldman Sachs.
Paulson is hopelessly conflicted. The “bailout” should be contingent on his resignation. But the Democrats have assisted in the Hank-fluffing that’s gone on for ten days.
from John Wonderlich via the openhouse project listserv:
john is blogging on this for the sunlight foundation. might watch that space too for updates. his latest post:
http://blog.sunlightfoundation…..committee/
OT, but needs to be seen. Bringing it up from EPU land:
If this true, these people are just sick!
From TPM:
In an election campaign notable for its surprises, Sarah Palin, the Republican vice- presidential candidate, may be about to spring a new one — the wedding of her pregnant teenage daughter to her ice-hockey-playing fiancé before the November 4 election.
Inside John McCain’s campaign the expectation is growing that there will be a popularity boosting pre-election wedding in Alaska between Bristol Palin, 17, and Levi Johnston, 18, her schoolmate and father of her baby. “It would be fantastic,” said a McCain insider. “You would have every TV camera there. The entire country would be watching. It would shut down the race for a week.”
What a freak show!
Now I ask you, what is the McCain camp’s fascination with ’shutting down the race?’
Unless you know you’re in trouble deep.
the bailout should be contingent on a lot of things in addition to paulson’s resignation. things like transparency, accountability and re-regulation. none of which we have. can someone remind me again why getting a democratic majority in congress was so important in 2006? i can’t seem to remember.
hugh has a list (surprise!) of suggestions.
Whomever from the McPalin campaign that thinks a Bristol/Levi wedding would “shut down the race for a week” is smokin’ some serious sh*t.
One day story max. If that.
Of course we’ve heard the neocons in the House say things like, “I don’t think it’s fair that ALL banks are going to be bailed out!”. In other words, don’t help the little banks who might be in trouble….help the Big Boys only!
In football, it is the team that is ahead that wants to run out the clock. Why on earth would McCain want to run out the clock unless they have a last-minute game-changer up their sleeve, i.e., an October surprise?
Let me guess: IT’S SCHEDULED FOR NEXT THURSDAY. Wouldn’t surprise me in the least! Cowards!
Mostly, the little banks aren’t in trouble. They’ve been doing business the old-fashioned way.
In football you look at the scoreboard and KNOW if you are ahead or behind.
Calculated Risk has Pelosi’s Summary of the Draft Proposals…
It’s long on rhetoric and short on real action…
It occurs to me that the bailout is centered around the companies holding “toxic waste” securities, and yet I have heard nothing about any investigations of just who the seller was in these transactions. Did one firm sell more of the bad securities than the others? Shouldn’t we be looking to the sellers to make the securities holders whole?
[Psst, my money’s on Goldman as the one who sold the most. Just call it an inspired guess based on their stock price staying higher longer than the others. Couldn’t this be why they stayed propped up?]
We’ve got fivethirtyeight.com
The AIG deal is reminiscent of the Lehman failure where the Fed gave JP Morgan $138 billion to give to Lehman so that Lehman could pay off its biggest trading partner Citibank.
We do not know what is going on behind our back but in our name with our money. How many more of these “deals” and unseen players are out there they we haven’t heard about yet? And does anyone seriously think that Paulson and Bernanke are dealing on the up and up on these, or with our benefit primarily in mind?
Oh. ;-)
Heh, you’re now a die-hard Nate Silver fan, eh? ;-)
One day story max. If that.
It could last longer than that in James Dobson-land…
DING!
It sure has been one whole heck of a lot of fun watching palin blow up in the thugs’ faces…….which is not to say that they won’t find a way to steal the election anyhoo. The stupidity, it burns.
Didn’t the Senate shoot down a bill that would have gone after the oil speculators which would have made them actually buy the oil they’re speculating about? (not sure if I worded that correctly) Isn’t this what is happening on Wall Street with these companies? Seems to me it is. The money ran out a long time ago and business was still being done with money that didn’t actually exist or something to that effect.
It’s very complicated and this is why the assholes should wait for a bailout to see what the FBI turns up first.
I don’t understand what these “toxic” securities are. Are we talking mortgages that are in default and derivatives derived from them. Right now, there are about $111B in mortgages that are in default. Let’s say that those properties are now worth half of what they were sold for. The government could pay them off and sell those properties (or renegotiate their loand) for $55.5B, i.e., the cost of occupying Iraq for five months.
Visibly, I’m very confused about this predicament.
Weren’t you going somewhere? Gas?
This bailout is a swindle, pure and simple. Shame on the Dems for taking part.We have lost our country to fascists.
Use the $700 B for national health insurance–the Conyers plan.
Use the $700 B for infrastructure.
Use the $700 B for research to cure cancer or other diseases.
Use the $700 B for education.
Impose a surtax on the rich to make social security and medicare solvent.
I called Speaker Pelosi’s office, and was told the bill isn’t done. It will be posted here. The guy didn’t know when.
I know! If the wedding is planned for the day of the VP debate, Sarah will be shocked that anyone had figured out her strategy to not attend. She thinks no one can see through her and her intentions. She’s no different than a 3 year old who thinks you’ve disappeared when the child puts his or her hands over their eyes! Ummmmm, Sarah? We can still see you, dummy.
He seems to be the best we’ve got in terms of predictions, and so far his commentary makes a lot of sense to me. We’ll see how well he does come election day. I may not be a fan after that.
I am not an economist by any means but if I’ve understood things somewhat correctly, it’s not just mortgage paper that’s in default as a problem.
It’s also paper that was sold for a value of X that due to the depression of the market an unknown amount is now worth Y.
And although the market may know what the value of X is, they have no freakin’ clue what the value of Y is; only that Y is a lot less than X
Or I might be an idiot.
Goldman should not be allowed to participate. Paulson should be investigated for conflict of interest. And why the hell are there secret meetings?
Cui Bono?
I’d like to know, step by step, what would happen if there was no bailout.
As georgia10 at Kos’ place so pithily said of McCain, skewering his campaign and comparing him to Don Quixote, searching the landscape on his unicorn for heroic deeds to do: “America doesn’t need saving, it needs stewardship.” (http://www.dailykos.com/) So it is with this financial bail-out.
Leaked details of the Bail-out Bonanza agreed between Congress and the Treasury make the plan a nightmare. We will still see financial jobs exported to the Dakotas, North Carolina, China and India. We will still face Dickensian bankruptcy court rules. We will still see our roads, bridges, water treatment plants and cityscapes crumble, while Republicans disrupt attempts to responsibly spend tax dollars to rebuild them.
This “bail-out” won’t address the unregulated greed that created a pyramid of derivatives that have now gone bad. It won’t claw back the exorbitant fees paid to executives who created and sold them, nor responsibly rewrite or undo the incomprehensible mortgages sold to a badly informed public. It won’t give that public an upside for their “investment” in financial assets no credit rating agency would rate and no billionaire, Arab sheik or Chinese mandarin would buy. And it won’t buy back enough of the derivatives to rescue bank balance sheets; the Wise Men will be back for more.
Hank Paulson and friends gave us this mess. Basing a bail-out on their advice is like taking driving lessons from Thelma and Louise. Meanwhile, Congress has avoided seeking advice from those economists who did predict exactly where we are, much like Mr. Bush dismissed the advice from those generals who told him how many troops he would need for his wars and about the murderous occupations that would surely follow having “won” them.
This is not a bail-out. It is a waking nightmare for already hard-pressed Americans. They expect more from Congress than another blank check to cover Mr. Bush’s bad debts. When will we get it?
Reuters is reporting…
This is just more of the same from the Bushies who always take care of their own. There is no way a real fair package can be passed as long as it takes 60 votes in the Senate to pass a bill.
If we elect a Dem 60 member majority in the Senate then we can make real substantial changes to the existing bill. That is one of the reasons it’s done in tranches and not one big check.
The Dems have purposely made this bill cumbersome to enc act to they can come back on 09 and craft a bill that will punish these Wall St criminals.
Which makes me wonder whether the big rush on the bailout is really a race against the FBI. And is Paulson clued-in, as Treasury Secretary, to all the ongoing investigations? Does he know he’s dealing with potentially indicted bad actors, or is he one himself?
It all stinks. Why isn’t there some beefed-up enforcement mechanism? Give Fitz a staff and an office off Wall Street. Let him find some wrongdoing — you just know he will.
Thanks except for the tax holiday for homeowners facing foreclosure and some of the oversight provisions posting deals online, possibility of judicial review, and conflict of interest rules for bailout managers, it is pretty much as I have heard –which means that it is the Paulson plan with several daubs of lipstick.
As I have said before, the Paulson plan will not work because it does not change problem mortgages to fixed longterm ones across the board, re-regulate, or sharply circumscribe derivatives.
It calls for a strong oversite committee appointed by bipartisan leaders in congress. Who are the bipartisan leaders in congress?
Who or what companies are receiving these billions?
According to Dear Leader, “panic” and “crisis” will ensue.
How far we’ve come from “the only thing we have to fear is fear itself.”
They work for the Preznit and, maybe in a few months, for Goldman Sachs. So butt out!
Wow.
Truer words, ne’er spoke.
How about if someone brought Spitzer back – he would have an ax to grind
Derivatives can be based on mortgages or any other loan-like instrument, notably bonds. And what you case about unknown market value can be true of all of them, but notably the real-estate market is in rapid decline and relatively few sales are occurring so current comps are hard to come by. But if we are talking only (or mostly) about real-estate-based securities when we say “toxic securities”, we have some idea of the scope of the problem. If we are talking about corporate bonds, the issue is much larger and there is no tangible asset securing the base-level instrument.
Hey – Thelma and Louise were pretty good drivers, until the very end.
Heh, if McBush does win, it won’t be Nate’s failure to read the tea leaves… It’d be Diebold and police checkpoints amongst a whole host of other shenanigans, and, one can’t possibly factor that in the polls…! ;-)
Thieves rarely meet in the public eye.
reminds me of the pretense of a dem fisa bill that was really dni mcconnell’s.
It depends on how you define “bi-partisan.”
There’s the Republican party (largest branch).
There’s the Republican wing of the Democratic Party (second largest group).
And there’s the Democratic Wing of the Democratic Party (the smallest grouping).
I’ve got a katana, a tomahawk and a K-Bar he can borrow that need grinding.
I think the bailout should be a referendum in the nov elections.
Let them all campaign and explain why we need to pay this, who gets it, why it happened and what is being done to prevent it again.
We can’t trust the representatives and certainly not Paulson and Bernake, Greenspan all shills from Wall Street. You don’t put a fox to guard the hen house.
you’ll have to ask obama, pelosi and reid that one.
Eclectic connoisseur of cutlery, eh? ;-)
Goldman Sachs, Blackwater, Halliburton, Carlyle Group, Riggs Bank
Just a quiet kinda guy. *g*
Cayman Islands anyone
Lend him the K-Bar. It’s more versatile: it can slice and dice and pound better than a Swiss Army knife.
Of the 233 Democratic representatives, 47 are blue-dog conservatives. So we have:
— conservatives 249 (202 Republicans plus 47 blue dogs)
— non-conservative (centrists and liberals): 186 Democrats.
That was meant for CTuttle @ 59. Sheesh.
No excuse for not hitting the Reply link. None whatsof*kin’ever.
Just moving from western end to eastern end of the state for a while (approx. 400 miles). Arrived but it was a miserable trip all day Friday. Gas non-existant or in very short supply across most of the southern side of the state. Spent one solid hour waiting in line mid-state to get enough to reach the coast. Spit! Then arrived to find problems getting on-line due to glitch in some of Apple’s latest up-grades. PTL for a computer guru who managed to temp fix the problem via phone. Double spit!
Someone wants to kill this deal the timing is to Lucky, this is an obvious leak. Not that I mind, but I do like knowing who the other players are…and why and what for are they are playing.
That’s just it, right there.
As a citizen of a democracy, I need to know exactly what I could expect if nothing is done to rescue investment banks. Only then can I weigh whether or not it is in my interest to spend $700 billion on banking rather than, say, universal healthcare.
“It will cause chaos” is just not reason enough for me.
Damn, forgot about my Swiss Army knife. It lives with me.
No, I think it’s exactly the opposite. They’re trying to stop the clock to stop the bleeding.
My Arkansas ‘Toothpick’ has a little more heft to it…!
Trust me – there are a whole lot more members of the Republican Wing of the Democratic Party than just those that self-identify as “Blue-dogs.”
Who besides us, John McCain who might be looking to score points opposing this deal and people short the Dollar long on Gold stand to benefit if he deal is trashed.
Somebody close to Paulson has betrayed him why is the question.
Not real fond of the balance of those big knives.
We have had chaos for 7 years
I would imagine if the big banks fell, the little banks would take up the slack and would probably be pretty grateful. Just a guess, of course. In the real world that’s what happens. When the big electrical contractor folds because of stupid business practices, then it’s the little guys in the area who get the work. We’ve been living under the Bush Regime for 8 years, so I know the real world doesn’t apply anymore. Nothing works correctly.
Seriously… which firms are getting all this cash?
Which firms were selling unadulterated toxic rubbish? Why are THEY not being charged with fraud?
You got that right. Being corrupted while serving on city councils, county commissions and in state legislatures left them with an addictive taste for power, money and the things money can buy. But I’m not sayin’ anything I wasn’t sayin’ 30 years ago.
The Blue Dogs have long limited their membership numbers in order not to become an unwieldy, and too-visible, caucus within the party’s ranks. Unlike, say, the Progressive Caucus, whose doors are open to all.
Well, that would certainly exemplify leadership, character, judgment and multi-tasking, wouldn’t it? I believe the VP debate has been on the calendar for quite some time. To interrupt it for a shot-gun wedding, replete with all the trimmings and hoopla would merely demonstrate a candidate (campaign) who is disorganized, places family before country, and demonstrates a contempt for ‘regular’ Americans who still seek to “know” who Sarah Palin is.
They all were
The Carlyle Group seems to be a part of this fraud, surprise, surprise.
trust not required. just the history of less than 2 years: the 110th congress has taught us that the blue dogs are cover for a leadership that wants to govern like republicans but be seen by the voters are pro-working class dems.
and the leadership wouldn’t be the leadership if they didn’t have the support of a majority of their party.
These slackers say there is a credit crisis on Wall Street. That’s rubbish. None of these institutions has the cash to back up their “commitments”. Not a single one… even the little thrift on Main Street. They are all leveraged 10:1, 100:1 and 1000:1. The closer you get to the top firms the greater the leverage.
Banking is insolvent. That’s our fraction banking system.
Thanks Teddy.
digg
I’m not shy — please join thales11’s Digg.
TERM LIMITS… this is what you get when these slackers can be bought and return again and again’
TERM LIMITS
The trade off is well worth it.
There are more than enough competent people to serve.
TERM LIMITS
What we need is to borrow Kevin Smith’s wonderful “buddy christ” icon from Dogma, add Paulson’s face and someting like “Capitalism, WOW!”.
I’ll bet Paulson even blesses his clubs (or gets them blessed) for a better game too… LOL (Dogma fans know).
I wonder just how many of the lawyers in the House and Senate are members of the Federalist Society. We know they’ve infiltrated DOJ for decades but I find it hard to believe their disease isn’t pervasive elsewhere in the government. Secretive and restrictive groups make me very curious. We need another Jack Anderson in DC.
And the “bailout” makes no changes to these allowances for absurd and fictional leverage. No exotic derivatives and swaps are outlawed. No new disclosure requirements are put in place.
As Ian wrote last night, a wise captain would first stop the leaks. But there appears to be no wisdom in DeeCee, or it’s all been bought off.
Let’s get a real democracy.
No taxation without representation
shrink the MIC
Close down the money lenders of Wall Street
Finance is not an industry… steel, aluminum, machine tools are.
dugg!
It could also be a very good representation of the current republic Party:
Nothing but a bunch of cowards in the end. ;-)
The only people who get married on a Thursday are usually the rich ones. LOL I mean really, who gets married on a Thursday? It will be interesting if the Palins (parents of the bride, of course) decide to have this wedding on Debate Night rather than wait a few days for a typical weekend wedding.
Blessing the golf clubs? Wouldn’t surprise me. John Ashcroft anointed himself with oil when he left his position as the Attorney General a few years back. He probably had his golf clubs blessed too.
Wackos. All of them.
The sad fact is that capitalism is about to collapse and these guys are doing everything they can to stave it off.
It won’t work.
Money will be worth nothing at all very soon. Wiemar Republic.
The system is and has been fundamentally flawed and will crash and burn.
We are seeing it now, but this will do nothing but make some rich people richer.
Teddy, some tragic news outta Iraq… 8-(
http://www.mortgagenewsdaily.c….._Calls.asp
I wonder what the GOP would say if we let the jumbo loan market collapse. Why should we shore up rich people’s home values? If we let those loans collapse we can divide the McMansions up into affordable housing.
Yes, the Democratic leadership is like the guy in those really bad ads, yelling at the camera about how low his prices are, “I’d give ‘em away but my wife won’t let me.” That’s Pelosi, Hoyer, Reid, and Obama. They’d really like to do all this good stuff for us but Bush, the Republicans, Blue Dogs, and “python spirits” won’t let them.
Pelosi and Reid are a couple of phonies… and they are capitalists pigs without lipstick.
How many regular folks can’t afford a simple wedding just for their family and friends? It’s like the Sun King parading through the slums of Paris while those who have starved to death lay in the street.
lol. from the dallas morning news – quoting stiglitz no less.
ThingsComeUndone is to long for Digg Thales the First Philosopher is a cool name though.
http://en.wikipedia.org/wiki/Thales
As I said once before about the Bristol-Levi wedding, it’s going to be a formal affair….
White Shotguns
That’s one cultural bias that’s gonna be a really tough nut to crack.
Teddy do you have the list of Blue Dog Dems or a link please?
fyi – just callled the house rules committee. staff is there and answering the phone, but no emergency meetings scheduled yet (i’d expect there may be one to report out a special rule for the bailout bill, if it is to come to the house floor for a vote tomorrow). was told they don’t have any sense about what the timing will be so just keep checking their website.
White Nike Air Jordans the Groom will try to run:). The bride might too I’m not sure I can’t read her.
Menu? Moose Pate? and what else . . .
Why isn’t Bristol holding out for a White House wedding?
Hand-clubbed Baby Harp Seal steaks on Arugula
Another reason Goldman’s CEO was there:
The Fed was trying to get them to give AIG a line of credit that would have been used instead of the Fed loan (although not $85 B).
Blankfein told them they were in trouble too and couldn’t manage that. So, they were left with the Fed loan.
I have no trouble believing that.
Cyanide Salmon from Bristol Bay sounds good, Sarah fought for the gold mine that will soon start killing fish in the bay that gives her daughter her name and Cyanide is now used to get the last bits of gold out of any mine.
Moose Turd Pie
Not sure if I’m allowed to do this, but I just posted a diary with links to the latest Bailout bill.
just tossing this link out there by the guy who predicted all this years ago , Dr. Doom. Nuriel Roubini. Here he offers alternatives based on a study of real life events.
http://www.rgemonitor.com/roub…..s_of_banks
Life appears to have gotten worse for everyone in Iraq who isn’t a straight adult male and a friend of the Green Zone Government. Women, children, and gays are having a very very hard time there.
Bristol Bay? I thought they named her after Bristol, Tennessee as an Homage to the NASCAR voters in Alaska. I guess BIR was not a naming option for a family with a track, trig, willow and piper. Go figure.
No purchase of derivatives. Primary instruments (e.g., mortgages and bonds) only.
Do you recall the scene in Doctor Zhivago when he returns to the opulent Moscow townhouse only to find it divided up among many families? I wonder how McLean Virginia and Marin County California think about that….
I thought maybe the Palins misspelled “Bristle” when naming their daughter. LOL
And doesn’t it seem plausible Bristol will name her newest child, Handle Bars?
Contact the Speaker here
Here is the Blue Dogs’ website
THAT is my question. I’ve sent it to all my congresscritters, no answer.
I think they don’t know what would happen to US, but they know what would happen to THEM, and that’s what they’re trying to avoid. scum.
when are people going to start questioning the PREMISE of supposed problems?
“Backseat” seems more likely.
Kay, who knew Mike Michaud was a Blue Dog?
Here is a year old article with some crunchy background about the Carlyle Group’s Mortgage investments. You would think they would like to be in the Cayman Islands. But No.
My favorite part is about the fees.
Never heard that before. Great fun!
Good link, thanks.
Christy hosting Book Salon a couple of flights up
Didn’t Hank Greenberg, head of AIG, suddenly sell $18 million or so of his AIG stock, once the “support” for AIG had bolstered its stock price?
Shouldn’t the government “recapture” those assets, kinda like they do when someone robs a bank?
Wall Street Executives Made $3 Billion Before Crisis
http://www.bloomberg.com/apps/…..refer=home
He is on some issues. He was for impeaching Dick Cheney and did vote against the Iraq occupation in the beginning too.
http://www.ontheissues.org/Hou…..ichaud.htm
He’s actually quite liberal on most issues.