bidness as usual.

if AIG ever sells out.

no comment.

Great catch. I’d be surprised if any of the trustees doesn’t have dirty hands in all of this.

The crime is that these credit default swaps were not regulated in the first place, as should have been done. As it stands, the counterparties paid for them and they are legally binding contracts.

To stiff foreign banks would be to send a very bad signal about the reliability of American financial institutions. I think the Fed is stuck with this; there is nothing else they can do

Henhouse, meet fox.

iwas banned fora day when i suggested warm black sticky stuff,with yellow fluffy bird material,and a rail log…………g

‘

Why all the fuss, we were led to believe that if we didnt give AIG the money now the sky would fall! The amazing thing is that the people have been lied to, not by AIG, they are just the fall guy for being the first company to spend the money given to them by our elected crooks. Used to be when a company got in trouble it went bankrupt and was gone. We should be saying NO MORE LIES from the congress and administration, not AIG.

This is hush money: all we need is ONE, I tellya, ONE good whistleblower and the whole pack of ’em are going to the clinker, and they know it, Geithner AND Sumners included. They are all complicit, compromised, and conflicted as hell.

The fat cats DON’t CARE ABOUT ANY OF THE OTHER FAT CATS: they ONLY care about covering their asses with these bonuses. Otherwise they would not pay them. They are all ruthless.

Too bad there isn’t a vote of confidence process in the U.S.

snark
Which AIG absolutely had to do, no choice. Those traders, they have AIG over a barrel. If they leave, there’s no telling what terrible things might happen
/snark

There, I fixed it for you

Just don’t mention certain shooting sports in conjunction with a certain recent VP who enjoys those sports…..

other people have pointed out bits of this story, but bernhard at MoA puts a lot of it together today:

Luckily for the administration the public, while watching the AIG show, misses the real robbery.

Most of the money used for the general bailout is coming from the Federal Reserve and is not under control of Congress. The new version of the Term Asset-Backed Securities Loan Facility (TALF) will put another trillion Fed/taxpayer money at risk. The program will lend to banks and hedgefunds to buy up ‘asset’ backed papers (bundled consumer and loans, commercial real estate loans etc.). It allows for great profits for those bank entities with the Fed taking 90% of the risk (also here):

Through the program, an investment fund can put down $5 to $14 for every $100 it plans to spend, borrowing the remaining $95 to $86 cheaply from the Fed. It agrees to buy highly rated securities issued by lenders that the Fed deems eligible collateral for the loans.

The aim is said to be to create more consumer lending, but I see no signs that consumers are willing to borrow more. Saving rates are going up as people become more frugal.

I suspect the more likely but unspoken real aim of the program seems to move ‘toxic’ assets from the banks balance sheets by subsidizing the buyers of these assets with the default risk transfered to the Fed.

and then it gets worse. recommend the post to all.

From the perspective of AIG, there’s only on catastrophe that can happen, and it begins when some Financial Products insider talks …

Those ‘bonuses’ are hush money, fat chance that’s going work.

Somebody’s bound to talk, bonus or no.

This fraudulent plan has been a long time in the making. Habeas corpus gone. Federal troops positioned invade the country. The intra-country spying all nicely set up. They overplayed their hand. Why did they do that? Is this an exercise in showing us who has the real power?

Heard a brief snippet on NPR this morning (can only bare to listen for a second), that the Mafia is doing very well indeed in this economy. To which I thought, yep.

While I basically agree with both of your points, I feel some shared pain is in order.

A 15-20% haircut taken by the counterparties in these transactions would hardly shake the financial markets anymore than they have already been shaken, and as for ‘legally binding contracts’, tell that to the UAW workers that have had all kinds of concessions forced on them.

did I miss President Obama “addressing AIG” sched for 11:25 et or has it been pushed back ??? – none of the bobbleheads are talking about it

In 2008, the 10-K tells us

As a former securities lawyer, I’m always delighted when folks use a company’s required filings to find juicy, incriminating tidbits. [You can see why wingnuts hate those “burdensome government regulations.]

Years ago when we were involved with getting drug companies to accept responsibility for the deaths of children caused by defective vaccines, we used the “we’re making gobs of money” statements in their 10-Ks to counter their “we’re way too poor. Don’t make us do that” pleas they made before Congress.

given that the guvmint owns 80% of this mess, is there any way to force AIG to divest its financial product units (and other troubled non-core businesses) into a “bad bank”, leaving the core insurance company (which the piece that as a country we can’t afford to let fail)? The fp beast can then be slowly unwound and eventually slain.

Couldn’t this happen in bankruptcy?

AIG is a poster child for what a joke transparency has been. Everything to do with how AIG has been handled stinks. What little we do learn dribbles out afterwards and is portrayed to us as a done deal. We are supposed to have confidence in any of this?

I would ask again where are the hedge funds in all this? A lot of this AIG money went to banks but was this for instruments they held for themselves or for third party hedge funds?

not to mention blackwater being deployed in nola during the hurricane.

Couldn’t this happen in bankruptcy?

Not if you are Bush, Obama, Bernanke, Paulson, Giethner, or Summers and are committed to pretending that all of these entities are solvent when they so obviously aren’t.

you can’t spell ‘trustee’ without ‘ruse’…

yeah, but given that we own it, we could in theory make it happen out of bankruptcy, right? I don’t think we want one of the nation’s largest insurers to fail (go into Chapter 11) before we divest this loser of a business, do we?

Dugg

beautiful,CNBC is also useful there

huh yep – one of my best temp gigs ever was for a litigator – she handed me a stack of 10k’s and a highlighter, gave me a brief primer on “gobs of money” speak and told me to get to work – loved it

AND THE KILLIN’ GOEZ ON AND ON AND…

Citizen bobh:

Your concern about the message sent to the world banking establishment if we jest cut the bastards loose from blood sucking our treasury and our children’s future is pathetic. World capitalism and “the rule of law” have destroyed the mechanisms that sustain life and allow for the opportunity for people to feed themselves and for civilization to advance…don’t you get it??!! The system is broken and it can’t be fixed by indenturing our children and their children to payin ofF the debt incurred after these muderous crooks stole the equity from our economy.

Blow up AIG, let the bastards who created this mess take the hit…it is time that we recognize that not only can’t capitalism as we have known it be fixed but WE DON’T WANT IT TO BE FIXED!!!

Not one more dime in bailouts, close AIG down and declare to every one of their creditors that we are comin after the bailout money they sucked thru AIG’s teat.

Wake up people, Jesus H. keeeRIST on a God damned crutch, the crooks have killed the golden goose and we’ve gotta take back what is ours!! We start by gettin behind Nancy Pelosi and the Congress, Obama doesn’t want a war with the people of the country and the bankrupt bankers and Blue Dog fascists aren’t enough to save his ass.

KEEP THE FAITH AND PASS THE FUCKIN AMMUNITION, IT ISN’T HARD TO FIND THE BAD GUYS…THEY’RE THE ONES THAT HAVE ENOUGH TO EAT!!

EPU’ed but William Black via Naked Capitalism on the AIG bonus mess:

This is the consequence of six things on the Treasury end of things:

(1) the failure to use Chapter 11 bankruptcy/pass-through receivership to deal with deeply insolvent financial institutions

(2) the failure to expose, and to the extent possible, remedy through restatements the massive accounting fraud that AIG was/is engaged in that triggers the bonuses

(3) the failure to bring criminal charges against the control frauds

(4) the failure of Treasury as negotiators — they had all the leverage when they bailed out AIG and could have conditioned the aid on at least the VP tier and above giving up their bonuses

(5) the weakness of Treasury’s current lawyers who, if press reports are accurate, couldn’t think of any way for the U.S. government to take effective action against what it reportedly views as a scandal,

(6) (and I haven’t seen this discussed) why was Treasury blind-sided by this? It confirms that they did not conduct even the most obvious due diligence on AIG’s assets and contingent liabilities

http://www.nakedcapitalism.com/

just now – Shuster talking about you hippies and your ‘displeasure’ with Geitner/Summers . . . problem for WH ? Chuck Todd says ‘increasingly so’

An infamous GM executive once said about loss-making car sales that he could “make it up in volume”. He could “return to profitability” by making more sales each of which lost money. That thinking is a good introduction to AIG and the US bail-out of Wall Street’s greediest, riskiest, least responsible, too-large-to-fail players.

In bankruptcy, AIG would have had the power to accept or reject (terminate) its employment contracts, like all its other ones. It would have had to take the consequences, like massive walk-outs. Which means it would have stopped writing its most loss-making business. A competent board would have been compelled to move in that direction or face personal liability for failing to do so.

Any competent creditor providing funds to a debtor in extremis would have demanded essentially the same things, if on a “voluntary” basis, or put the company in bankruptcy to get it. After all, such a creditor knows the poor commercial risk of such lending, and needs to protect her assets as much as possible by cutting losses, stop what’s causing them and put its new debt ahead of all others. Otherwise no one gets paid or has work.

A competent lender would have demanded wholesale management changes at the top and put a stop to the company’s biggest drains on assets and profitability.

If, like Enron, those drains were the company, he would have refused to lend and, if a host government that had wrongly allowed one of its economic actors to become too big to fail – if firing the actor would mean closing the theater – it would have picked up the pieces afterwards. Not, that is, by letting all the houses burn down, but by assuring “markets” that it would promptly send in the first responders who would have first cleared the buildings, then dowsed the flames. It would then have made the area safe before rebuilding or allowing people back into ones still standing.

As it stands, AIG is both the fire and the fire fighters. The government and its taxpayers are locked in their building and AIG won’t let them out. That is, until they pay a king’s ransom for the water and fire staff (privatized, of course, like all Republican governmental functions). Time for the USG to take matters into its own hands.

[x-posted below]

You are assuming that the Treasury management (from wall st) wanted to do these 6 things.

http://oxdown.firedoglake.com/diary/4232

We are all hippies now.

AIG guaranteed all the obligations of AIGFP, another detail I picked up in the 10-K.

AIG apparently guaranteed the retention bonuses of the AIGFP traders.

Wow.

It’s hush money.

earlofhuntingdon, you should take a look at EW’s take on the documents on the retention bonuses. It is really infuriating.

Shooting clipped wing birds is not sport. It shows you what kind of chickshit punk he really is.

No, I don’t think either I or Black believe Treasury was interested in pursuing aggressively the best way of dealing with AIG. The point is that, as has been the case throughout all of this, there have always been good sensible ways of avoiding these problems or addressing them at each and every stage. Even as the situation has worsened because workable solutions have not been pursued there have always remained other good approaches to the next level of problems. When we truly crash and burn it will be because our leaders consistently turned their back on what would work to prop up a corrupt and failed system even as they denied it was either corrupt or failed.

The Best and The Brightest … kinda like the team Bush put together …

In all fairness though, the recoil could have shaken Chin-ee’s Pacemaker, so there was some risk. /s

here in texas we also have deer “hunting”. put up a camouflaged shelter (aka a deer blind) where you watch for deer with your loaded gun. then set out deer feed and wait. they call it deer hunting.

What does it tell us when none of the people working in the banking industry can be trusted? It might indicate you put other people on the job. But they don’t seem willing to put people that are otherwise competent into positions supervising the banks. Why? Would it not be a wise idea to have a grownup that understands profit and loss, instead of the people that can tell you only that profit means loss?

I still have a question. Didn’t anyone in AIG do anything illegal? Fraud? Anything??
Are any of the banks and other organizations-like AIG-being investigated for any criminal activity? If not, why? Why no arrests?
Have any of the MOTU-Masters Of The Universe-been fired? Laid off?
Why havn’t they just told those idiots who are getting all that bonus money that they are not getting their bonus. What could they do?-Q. For what reason are they getting these contractual bonuses? There have to be terms given, no? I mean the contracts can’t just say we have to give X$$ bonus every year no matter what your performance is, do they??? If the company loses 500Billion $$ because of your actions, do you still get a bonus? Why???
Arn’t bonuses tied to company performance? I know that boards still hand out stock and bonuese to CEOs even when company performance is in the toilet, but to ordinary workers? Why do they need an incentive just to do their job?

I did, I agree, it’s brinksmanship and blackmail. Time to call them on it. The taxpayer is paying the full tab anyway; no reason to make these rapacious managers richer in the process.

And kudos to the image-master who told it like it is: AIG is Enron, only bigger, nastier and dirtier.

Its managers weren’t laughing about bankrupting grandmothers in California because of artificially and illegally high utility bills. They were bankrupting whole economies because they built one house of cards atop another.

I was less shocked by the foreign banks than by the DOMESTIC banks that are also beneficiaries of Congressional largesse in their own right. Double-dipping? When all the dust settles, how much of the total paid out to myriad entities via complicated transactions will turn out to benefit only two or three of the players?

I sense absolutely NO trust at all in Obama and his administration from this discussion.

Why did you even bother to vote for him if you’re just going to attack him like Republicans?