Thanks to Bloomberg News, we now have a good idea how much of that $13 billion pass-through bailout Goldman Sachs got from AIG last year was pure taxpayer-financed gravy: $5.2 billion, courtesy Tim Geithner.It goes on to say,
AIG collapsed last year in part because it had written insurance policies on billions of dollars in stupid bets made by Goldman, Merrill Lynch, Deutsche Bank and others. Since it was functionally bankrupt, last September AIG thought it would be able to convince those banks to accept significantly less than face value on the credit default swaps it had sold them. How much less?
Then a funny thing happened: The New York Fed opened an $85 billion credit line for AIG, staving off bankruptcy with a massive influx of taxpayer dollars and effectively taking control of the insurer. Habayeb was pushed aside as chief negotiator with Goldman and the other banks on the issue of how much AIG owed for those swaps and replaced by Tim Geithner, then the chairman of the Federal Reserve Bank of New York. Geithner had a different opening position:You must remember that Federal Reserve Bank of New York is the most influential of all the Fed banks. You should also know that JP Morgan has and has had a seat on the Board of Directors. Wonder why JP got 55 billion to buy Bear Sterns for 250 million!
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.Remember, the NY Fed was tehn headed by Geithner, currently our Secretary of the Treasury who replaced form Goldman chief Henry Paulson who also participated in this decision. The tangled web is certainly being exposed.
I commend Gawker.com for relaying the Bloomberg story and adding his commentary. It is difficult for any one source to post all the stories relating to the corruption and conspiracies occuring between our government and the private banking industry - which includes The Federal Reserve - a private company not a US agency - and its regional operations such as the NY Fed.
Here is an interesting quote from Gawker.com,
Geithner made the decision in total secrecy. He tried for months to keep the list of counterparties to AIG secret, and Bloomberg reports that the New York Fed ordered AIG executives not to file SEC documents that would reveal details of how the swaps were being handled: "Don't you think your counterparties will be concerned?"Are we concerned and outraged yet? I know I am, how about you?
Read the full report...click here