Yesterday, Bloomberg News continued to shine a light on the back room dealings that took place at the height of the financial crisis.
Rep. Darrell Issa (R-Calif.) obtained emails that revealed the former head of the New York Federal Reserve, Tim Geithner, instructing AIG to withhold details about paying counter-parties a bewildering "100 cents on the dollar for credit-default swaps they bought from the firm."
Why did Geithner tell AIG to exclude this material information from their regulatory filings?
The answer: Because the Federal Reserve "decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps" on which they gambled.
Timothy Geithner demonstrated unconscionable behavior in America's capitalist system. Goldman Sachs and the other banks knew very well that AIG did not possess the collateral to pay the claims in the event of a default scenario. If AIG were legally obligated to possess that collateral, the swaps would have been called "insurance." Therefore, Goldman et al assumed a risk, and they failed. However, Geithner abated the other culprits to give his gambling buddies a full payment courtesy of our hard earned tax dollars.
In this case, Tim Geithner wasn't acting to save the system (as he claims) because a 100 cents on the dollar repayment was not required.
In what alternative universe do gamblers get paid 100 cents on the dollar for bets gone awry? Only in a universe regulated by Tim Geithner and the other cronies at the Federal Reserve and United States Treasury.
"Federal Reserve officials provided AIG's counterparties with tens of billions of dollars they likely would have not otherwise received," Neil Barofsky wrote in a November 17 report. "The default position, whenever government funds are deployed in a crisis to support markets or institutions, should be that the public is entitled to know what is being done with government funds."
For capitalism to work, rewards must flow to those who bet correctly, and punishments must flow to those who are wrong. We do not need cronies shuttling taxpayer dollars to their former firms and colleagues. We do not need U.S. Treasury Department officials lying to us (See "The Treasury Department Endorses Lying to the Public"). At this point, it's time for the Justice Department to investigate whether we are witnessing one of the greatest insider heists in the history of the world.
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>>“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 began to insulate himself 'weeks earlier'? Do those 'weeks earlier' extend back to before the election of 2008? Does that mean that Geithner was already operating as a member of a new administration even before Obama defeated McCain?
"At this point, it's time for the Justice Department to investigate whether we are witnessing one of the greatest insider heists in the history of the world."
HERE, HERE, Sir! You write the truth, and it is NO exaggeration!
The public needs to put a fire under Obama and Holder - it won't be easy - they are (in my opinion) in bed with the banksters.
A special prosecutor?
This is THE QUESTION Pres Obama should have asked....
The more we learn about what went down between New York and Washington in 2008--especially the critical turning points between mid September (Congress notified of imminent financial collapse by Paulson) and mid-November 2008 (Obama elected and starts naming/rewarding aspirants for new administration)-- the more we must question Hank Paulson's Chicken Little demands on Congress.
Economic historians will no doubt debate ad nauseum whether Paulson's Panic in 2008--largely inspired by Hank's personal concerns about the unraveling Lehman/AIG world of his Wall Street cronies-- set off the first Great Depression of the 21st century. The biggest question, however, is how the self-inflicted excesses of Wall Street and Big Banks, got translated into Government blank-check writing. How TRILLIONS of taxpayer dollars got bamboozled -- not into the REAL ECONOMY or Main STreet lending , businesses and jobs, -- but back into the greedy pockets of the very people who had orchestrated/presided over the debaunched practices that caused the Freeze of Financial markets. The CDO/swap insurance- "played" for protection from wreckless gambling with OPM--became as worthless as no doc loans. Well...DUH!!!
In the real world, if you bet on the wrong horse or buy the wrong stock or make a bad loan to your neighbor, you loose your money and learn from your mistake.
What kind of contractual obligation is it, if one party is inserted into the contract at a later date, and only in the worst case scenario? Contracts can't be retrofitted to eliminate penalties for the original parties ( who willingly assumed such risk at the outset ).
They rolled the dice and they came up snake eyes. Tough luck.
But, I specifically blame the Rethuglicans, they started this with the TARP bailout and refuse to participate in Health Care Reform because they would rather use our taxpayer money to help their greedy wealthy cronies, rather than to see hard working Americans get the single payer health care they deserve. It's time to use taxpayer money for something beneficial to society and tangible!
It's taxpayers money that the govt. hold in the Reserve!!! But somehow republicans want us to believe it's theirs to do what they want and American taxpayers have no say! They want us to remain silent. This is pure all out corruption and robbery!!
Last I check, Health Care Reform is an American bill, which will benefit ALL Americans, including the 2 faced Republicans that say they are against it.
Last I check, Republicans were sent to Congress by the American constituents to work on their behalf, not to just sit back and say NO to everything and whine and complain.
Last I check, Democrats are the majority in Congress, Republicans are the minority; therefore, they have to take directions from the Majority Leader -- it's how our American political system work.
But no, the Republicans would rather watch Americans suffer to make a non-relevant political statement. They are nothing but a bunch of lazy, ignoramous cry babies -- wah..wah...wah.
What are we going to do about this? I'm actually glad republican Darryl Issa is doing something despite my disgust with republicans. Obama needs to get the message big time.
If Geithner stays, it's called 'rewarding bad behavior'. He will continue to do things for Wall Street but simply be more careful about it.
sortin' da eggs.
Foxes in da hen house
sortin' da eggs.
Bernake, Geithner, and Summers are three of the foxes.
And Obama is either head fox or a front for the foxes.
Yes, I keep repeating myself on this.
Eliot Spitzer had an interesting interview about this on the Ed (Schultz) Show this evening on MSNBC.
He keeps up his King Solomonesque mantra: Don't let Perfection be the enemy of the Good. But, seems to have no problem at all with allowing the Geithner/Summers/Rubins Cabal to make Financial Malfeasance the poster child for his White House.
Obama has allowed narrow elitist financial interests to over-ride and over-weigh those of broadbased national interests. as voiced by more savvy leaders such as Paul Volcker and Sheila Bair.
Obama should bring in retiring ND Sen Dorgan--who spoke so eloquently a decade ago of the disasters which would come from unregulated derivatives and repeal of Glass-Steagall -- to replace Geithner. Geithner is brilliant but lacks political judgement and seems to have a tin ear to anything coming from outside the Wall Street echo chamber. Dorgan better understands the needs of Main Street and small businesses, which are essential to any kind of sustainable economic recovery.
"Senator Dorgan knows that our country's economic strength has always come from our innovative ideas and hard-working people, and ...policies that will continue to spark new jobs and new opportunity....
Dorgan ... supports creating incentives for companies that create jobs right here in America.
... he believes in meaningful oversight of financial markets and has been critical of regulatory agencies that are not doing their jobs of protecting taxpayers."
you can look at the guy and tell he is dishonest.
but he's got to do it.
“Secretary Geithner was not involved in any of these e- mails,†Gibbs said. “These decisions did not rise to his level at the Fed.â€
"... (to) rescue fully reimbursed banks including Goldman Sachs Group Inc. and Societe Generale SA for swap guarantees sold by the insurer. Rep. Darrell Issa has called the rescue of New York-based AIG a “backdoor bailout†of financial firms."
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6brnESewBQQ