The average American may think this is great news if they were really paying attention and had all the facts. An SEC charge against Goldman Sachs is more deflect and distract.
TurboTax Timmie (and some say Hank Paulson) was in China begging for cash. Reports of Bill Clinton secretly heading over to Japan for cash, Barack Obama bowing to the chinese a couple weeks after a secret trip to Afghanistan(and God knows where else), and then this little story from MarketTicker that you may have missed in the all the tea party bashing going on the last two weeks.
No, not just Greece – all of Europe. Without Congressional authorization or notice, of course.
Hattip to a nice emailer….
Or if you prefer it on a one-year time scale…
That nice little vertical line is a gain of $421.8 billion dollars of outstanding loans and leases in one week’s time.
WHERE THE HELL DID THAT MONEY GO AND WHAT COLLATERAL WAS TAKEN AGAINST A FOUR HUNDRED BILLION DOLLAR INCREASE IN OUTSTANDING LOANS?
You won’t find anything like that in the records – because it’s never happened before. That’s beyond unprecedented, it’s ridiculous, and assuming it’s also accurate, someone has some ‘splaining to do on what clearly appears to be some sort of back-door game being run.
Update: It has been suggested that this may be related to the FASB changes and securitized loans coming back on the balance sheet. If so, where’s the alleged memorandum items on the other side and the footnote on FRED? The latter is missing, but the necessary data on FRED to confirm that is not yet updated.
Nonetheless, if this is the case, it’s still bad (just not catastrophic) as this will directly hit capital ratios. Or, put another way, where’s the additional capital that “should” be there to support what is now on balance sheet and was previously off (never mind that it was crooked as hell to have it off in the first place!)
So next time you see something incredibly out of the ordinary (Goldman Sachs charged? AYFKM?), ask yourself, “what are they trying to hide?”
April 16, 2010 Goldman Didn’t See SEC Coming FBN’s Charlie Gasparino says sources inside Goldman Sachs say they didn’t see the SEC probe coming.
April 7 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said joblessness, home foreclosures and weak lending to small businesses pose challenges to the economy as it recovers from the worst recession since the 1930s.
“We are far from being out of the woods,” Bernanke said today in a speech in Dallas. While the financial crisis has abated and economic growth will probably reduce unemployment over the next year, the U.S. faces hurdles including the lack of a sustained rebound in housing,a “troubled” commercial real estate market and “very weak” hiring, he said.
The remarks reflect concerns by Fed officials at their meeting last month that the job market and tight credit would restrain consumer spending. At the session, Bernanke and his colleagues reiterated interest rates will stay very low for an “extended period.” He didn’t repeat that in today’s speech, while saying the Fed’s “stimulative” rates will aid growth.
“The economy has stabilized and is growing again, although we can hardly be satisfied when one out of every 10 U.S. workers is unemployed and family finances remain under great stress,” Bernanke said in prepared remarks to the Dallas Regional Chamber.
Separately, New York Fed President William Dudley said today that the benchmark federal funds rate “needs to be exceptionally low for an extended period to contribute to easier financial conditions to support economic activity.”
FOMC Vice Chairman
Dudley, who serves as vice chairman of the rate-setting Federal Open Market Committee under Bernanke, was responding to a question from former U.S. Deputy Treasury Secretary Roger Altman, now chairman of Evercore Partners Inc., after a speech to the Economic Club of New York.
Consumer credit declined by the most in three months in February, a Fed report showed today, indicating Americans are reluctant to take on more debt without further improvement in the labor market.
Borrowing fell $11.5 billion after a revised $10.6 billion January gain that was twice as much as initially estimated. The decline in the February measure of credit card debt and non- revolving loans was worse than the lowest estimate in a Bloomberg News survey of 34 economists.
Stocks extended losses after the report. The Standard & Poor’s 500 Index fell 0.8 percent to 1,180.15 at 3:28 p.m. in New York. Treasuries rose, pushing the yield on 10-year securities down nine basis points to 3.86 percent.
At the meeting last month, central bankers left the benchmark rate target, covering overnight interbank loans, in a range of zero to 0.25 percent, where it has been since December 2008.
The median estimate of analysts surveyed by Bloomberg News last month is for a Fed interest-rate increase in November.
“Although much of the financial system is functioning more or less normally, bank lending remains very weak, threatening the ability of small businesses to finance expansion and new hiring,” he said.
The Fed last week completed plans to purchase $1.25 trillion of mortgage-backed securities and $175 billion of federal agency debt to reduce home-loan costs. Central bankers are debating when to start selling the debt to reduce the Fed’s balance sheet, which has ballooned to $2.31 trillion from its pre-crisis level of about $874 billion.
“We have yet to see evidence of a sustained recovery in the housing market,” Bernanke said. “Mortgage delinquencies for both subprime and prime loans continue to rise as do foreclosures. The commercial real estate sector remains troubled, which is a concern for communities and for banks holding commercial real estate loans.”
Bernanke said some of the economy’s “toughest problems” are in the job market. U.S. employers added 162,000 jobs in March, the third gain in five months and the most in three years. The unemployment rate held at 9.7 percent, close to a 26- year high.
“Hiring remains very weak,” Bernanke said. “I am particularly concerned” that more than 40 percent of those without jobs have been out of work for at least six months, because such spells may erode skills and reduce the workers’ income and employment prospects, the Fed chief said.
The economy expanded at a 5.6 percent annual rate in the final three months of 2009, led by inventory restocking, according to Commerce Department figures released last month. That pace probably slowed to 2.8 percent in the first quarter of 2010, according to the median estimate in a Bloomberg News survey of economists last month.
“My best guess is that economic growth, supported by the Federal Reserve’s stimulative monetary policy, will be sufficient to slowly reduce the unemployment rate over the coming year,” Bernanke said.
Bernanke said inflation “appears to be well controlled” and price expectations “appear stable.” A price gauge favored by the Fed, the personal consumption expenditures price index, minus food and energy, rose 1.3 percent for the year ended in February, slowing from a 1.5 percent rate in January. Fed officials have a longer-run goal of 1.7 percent to 2 percent for the full PCE price index.
Bernanke reiterated his call for a long-term reduction in federal budget deficits, saying “nothing prevents us from beginning now to develop a credible plan.” Without a commitment to “fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth.” (there ya go kids – that VAT is coming unless we flip this congress and abolish the fed)
The Obama administration estimates budget deficits will total $5.1 trillion during the next five years and hit a record $1.6 trillion in the year ending Sept. 30. Last year the gap widened to $1.4 trillion amid falling tax revenue from the recession, a bailout of the banking and auto industries, and the 2009 economic stimulus package.
When Barney Frank was asked about intervening on behalf of a home state bank for Troubled Assets Relief Program (TARP) funds, the Massachusetts Democrat admitted he spoke to a “federal regulator” but according to the Wall Street Journal, “he didn’t remember which federal regulator he spoke with.”
According to explosive new Treasury Department emails uncovered by Judicial Watch, it appears this nameless bureaucrat is none other than then-Treasury Secretary Henry “Hank” Paulson!
These documents, which we obtained in response to a Freedom of Information Act (FOIA) lawsuit, indicate that Frank personally called former Secretary Paulson regarding a TARP cash infusion for the Boston-based OneUnited Bank. And it worked. On November 25, 2008, following Frank’s intervention, the Treasury Department awarded $12,063,000 in bailout funds to OneUnited, which is located in Frank’s district.
Moreover, according to these documents, Frank is not the only Democratic Congressman with dirty hands in the OneUnited bank scandal. Rep. Maxine Waters (D-CA), whose husband, Sidney Williams, served on the OneUnited Board of Directors, also intervened on behalf of the Massachusetts Bank. (Williams resigned shortly after Waters approached federal regulators regarding the OneUnited TARP grant.)
Among the key documents is an October 17, 2008, email from former Deputy Assistant Secretary for Banking and Finance King Mueller to former Assistant Treasury Secretary Neel Kashkari and other Treasury officials referencing the contact between Frank and Paulson:
Just spoke w/ Jim [Segel] in BF’s [Barney Frank’s] office. This is about One United Bank (a minority owned bank in BF’s district). Maxine Waters is interested in the bank as well, Treas[ury] and others met w/ them (minority bankers assoc) last month per the Water’s request. They were a big holder in f/f preferred. BF is interested and may call HMP [Henry Paulson] again about this. FDIC is their primary federal regulator. [Emphasis added.]
And there is also this October 16, 2008, email from Kashkari to former Deputy Assistant Secretary for Appropriations and Management Peter Dugas: “Peter, Jim Siegel [sic] from Frank’s office called a few times-can one of you follow-up with him?” (Segel serves as Frank’s Chief Counsel.) Paulson’s October 2008 calendar, which has been released separately, details calls from Frank on October 2, 3, 7, 9, 13, and 17.
With respect to Rep. Waters, the documents include a January 13, 2009, email from Brookly McLaughlin, Treasury’s Deputy Assistant Secretary for Public Affairs, expressing surprise at Waters’ apparent conflict of interest: “Further to email below, WSJ [Wall Street Journal] tells me: …Apparently this bank is the only one that has gotten money through section 103-6 of the EESA law. And Maxine Waters’ husband is on the board of the bank. ??????”
The fact that Frank and Waters improperly intervened to score some TARP cash for OneUnited does not shock me. This is exactly the kind of corrupt deal-making I expected when the federal government decided to throw massive amounts of taxpayer dollars at private institutions. But I have to say, it is a rare case indeed when the documented evidence of impropriety is so clear.
These documents indicate that Barney Frank has been flagrantly dishonest about his role in lobbying for OneUnited. I mean, who is Frank kidding trying to suggest he didn’t remember calling Hank Paulson? It’s early but this looks to me like it could mushroom into another Keating Five-type scandal. And it certainly calls into question whether Rep. Frank should remain head of the powerful House Financial Services Committee.
No wonder the Obama Treasury Department stonewalled the release of these documents.
As I’ve mentioned previously, without the intervention of Frank and Waters, OneUnited would seem an unlikely recipient of TARP funds. As reported in the January 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide funds to healthy banks in order to jump-start lending. Not only was OneUnited Bank in massive financial turmoil, but it was also “under attack from its regulators for allegations of poor lending practices and executive pay abuses, including owning a Porsche for its executives’ use.” The bank continues to flounder and is one of the few financial institutions to have not paid dividends to the federal government in exchange for the TARP cash infusion.
The good news is that the media is beginning to cover this scandal. The Fox Business Channel highlighted our work just last night. To view the segment, go to our YouTube channel here.
Let me be clear, Goodwin Liu has the most radical views of any federal judicial nominee in recent memory. As former chairman of the far-left American Constitution Society he is in no small measure a leader of the opposition for those of us who don’t want judicial activists on the bench. I can understand, considering his own background, why Obama would want to appoint an inexperienced liberal to the courts, but the Senate needs to do its job and probe Liu’s views and qualifications. Many think he’s being groomed for a Supreme Court appointment.
By the way, our effort to educate the Judiciary Committee on the Liu nomination recently earned the attention of Fox News Channel. Check it out on Judicial Watch’s YouTube channel here.
Watch the entire video because it will explain in detail the money trail and why so few mortgage modifications are being made. No wonder they would not allow the banking systems to collapse, there wouldn’t be any bad paper to make an outrageous profit off of.
FOR IMMEDIATE RELEASE March 19, 2009 Media Contact: David Barr Office: (202) 898-6992 Cell: (703) 622-4790 Email: email@example.com
The Federal Deposit Insurance Corporation (FDIC) has completed the sale of IndyMac Federal Bank FSB, Pasadena, California, to OneWest Bank, FSB, a newly formed Pasadena, California-based federal savings bank organized by IMB HoldCo LLC. OneWest will assume all deposits of IndyMac Federal. IMB HoldCo signed a letter of intent with the FDIC on December 31, 2008, to purchase IndyMac Federal.
The 33 branches of IndyMac Federal will reopen as branches of OneWest tomorrow. Depositors of IndyMac Federal will automatically become depositors of OneWest. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
As of January 31, 2009, IndyMac Federal had total assets of $23.5 billion and total deposits of $6.4 billion. OneWest has agreed to purchase all deposits and approximately $20.7 billion in assets at a discount of $4.7 billion. The FDIC will retain the remaining assets for later disposition.
FDIC and OneWest have entered into a loss share transaction on the single family residential portfolio. Under terms of the loss share agreement, OneWest will continue the FDIC’s existing loan modification program.
Customers who have questions about the transaction can call the FDIC toll-free at 866-806-5919. The phone number will be operational this evening until 9:00 p.m. Pacific Time; on Saturday from 9:00 a.m. to 6:00 p.m. Pacific Time; on Sunday from noon until 6:00 p.m. Pacific Time; and thereafter from 9:00 a.m. to 5:00 p.m. Pacific Time. Interested parties can also visit the FDIC’s website at http://www.fdic.gov/bank/individual/failed/IndyMac.html.
IndyMac Federal sustained losses of $2.6 billion in the fourth quarter 2008 due to deterioration in the real estate market. The total estimated loss to the Deposit Insurance Fund is $10.7 billion. No further payments on receivership claims for uninsured funds from former IndyMac Bank, F.S.B. will be distributed as a result of this transaction.
Publication: Financial Deals Tracker Date: Friday, March 20 2009
The Federal Deposit Insurance Corporation (FDIC), an independent government agency, has sold IndyMac Federal Bank, FSB, a provider of banking and home lending services, to OneWest Bank, FSB, a newly formed federal savings bank organized by IMB HoldCo LLC, a thrift holding company controlled by IMB Management Holdings LP.
IMB HoldCo is owned by a consortium of private equity investors led by Steven T. Mnuchin, co-chief executive of private equity firm Dune Capital Management LP, and other investors in the consortium include J.C. Flowers & Co., LLC, Paulson & Co., MSD Capital, L.P., Stone Point Capital LLC, SSP Offshore LLC, a fund managed by Soros Fund Management LLC, and SILAR MCF-I LLC, a fund controlled by Silar Advisors, LP. All the entities are based in the US.As of January 31, 2009, IndyMac Federal Bank had total assets of $23,500 million and total deposits of $6,400 million. OneWest has agreed to purchase all deposits and approximately $20,700 million in assets at a discount of $4,700 million. The FDIC will retain the remaining assets for later disposition.Announcement (December 31, 2008):FDIC has entered into a letter of intent to sell IndyMac Federal Bank to IMB HoldCo.Following the completion, IMB HoldCo will capitalize IndyMac Federal Bank with approximately $1,300 million in cash. The transaction is expected to close in the first quarter of 2009.Rumor (December 28, 2008):According to Bloomberg, the New York Times reported that a consortium of private equity and hedge fund firms is in negotiations to acquire IndyMac Federal Bank.The consortium includes investment firms J.C. Flowers and Dune Capital Management LP, and the hedge fund manager Paulson & Co., Inc.The acquisition would include IndyMac’s 33 branches, reverse- mortgage unit and its $176,000 million loan-servicing portfolio.Barclays Capital, Inc. and Deutsche Bank Securities, Inc. are acting as financial advisors to the FDIC. Merrill Lynch & Co., Inc. is acting as financial advisor, while Weiner Brodsky Sidman Kider PC and Cleary Gottlieb Steen & Hamilton LLP are acting as legal advisors to the consortium. Sullivan & Cromwell LLP is acting as legal advisor to J.C. Flowers and SSP Offshore. Simpson Thacher & Bartlett LLP is acting as legal advisor to Stone Point Capital, MSD Capital, and J.C. Flowers. Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal advisor to Paulson & Co.
Deal Value (US$ Million)13900Deal TypePrivate EquitySub-CategoryInstitutional Buy-out (IBO)Deal StatusCompleted: 2009-03-19
Deal ParticipantsTarget (Company)IndyMac Federal Bank, FSB.Vendor (Company)Federal Deposit Insurance Corporation
Want to watch a couple of former Goldman Sachs executives squirm while they try to explain a cover-up? At 10am eastern, 1.27.2010, on C-Span 3, Timothy Geithner and Hank Paulson are going to be in House hearings about The NY Fed, AIG, Goldman Sachs, the SEC and ‘national security’. Click the C-Span 3 link to watch it streaming live on Wed.
For those that need a bit more information, Judge Napolitano speaks with Lew Rockwell about the ever growing mess that Geithner is finding himself in with thousands of emails that cover up just how Goldman Sachs was paid 100 cents on the dollar for AIG debt. (Among other items.)
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.”
Remember Paulson predicting an economic crash of biblical proportions if the government did not bail out the banks? TurboTax Timmie is warning that the markets aren’t going to like a Bernanke rejection by the Senate. I know you are sick to death of being threatened by government officials, and it is only adding to the anger and frustration in the country. Tim seems to think you are mad because of the “damage this crisis caused”. I would wager you are more upset with how the crisis has been handled since Paulson went to Bush’s WH with 3 pages and threats.
If you haven’t taken the time to read Karl Denninger’s take on warnings leveled by Robert Gibbs on FoxNews Sunday, you absolutely must see the info he has about ‘financial terrorism’.
And now, TurboTax Timmie laying the groundwork. (As if Obama’s new bank tax wasn’t hard enough on the markets last week.)
Treasury Secretary Timothy Geithner warned that the financial markets would view a Senate rejection of Ben Bernanke’s renomination as “very troubling” but said he’s sure the embattled Federal Reserve chairman will prevail.
“We’re very confident that the chairman will be reconfirmed by the Senate, and we think it’s very important he be reconfirmed by the Senate,” Geithner said Friday in an interview at the Treasury for POLITICO’s new video series, “Inside Obama’s Washington,” debuting Monday.
“He’s done a remarkable job of helping steer this economy out of the great recession. And I think he’ll play a very important role in helping in the success of our efforts to try to make sure we are bringing this economy back to durable growth.”
Asked about possible market reaction to a defeat, Geithner said: “I think the markets would view that as a very troubling thing to the economy as a whole. But, as I said, I don’t think they should be uncertain. I think they should be confident because we are very confident he will be reconfirmed.”
Bernanke is having such a rough time, Geithner suggested, because the country is “in a moment where people are incredibly angry and frustrated by the damage this crisis caused.”
THIS would be the reason why the government should not be allowed to bailout private companies and then tell them what to do, AND the reason we haven’t been able to trust the government and would be fools to continue to do so.
Government regulators threatened to remove top Bank of America executives if they backed out of a buyout of failing brokerage giant Merrill Lynch, and offered to provide taxpayer funds to compensate for Merrill’s poor performance, according to company records obtained by The Washington Times.
The documents – e-mails between bank executives and their outside attorneys as well as board meeting “talking points” prepared for then-Bank of America Chief Executive Ken Lewis – offer new insight into the hardball tactics that produced one of the biggest deals negotiated during the late 2008 global financial crisis, one that is still reverberating on Wall Street and in Washington.
They also underscore the fear shared by then-Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Board Chairman Ben S. Bernanke that allowing the deal to fall through would mean a sequel to the collapse of Lehman Brothers, whose failure months earlier sent the world economy into a tailspin.
“It’s highly unusual for a government agency – let alone a Treasury secretary and a Fed official – to virtually order a company to do something like this under threat of removal,”said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at the Boston University School of Law. “It raises a fascinating question which is, if you’re Bank of America and you have a shareholder’s interests paramount in your mind, what is your liability if you go against those interests in the interests of the country?”
Oct. 21 (Bloomberg) — The Obama administration will order seven companies that received the most government assistance to cut salaries of top executives by 90 percent on average, a person familiar with the situation said.
The Treasury Department’s announcement will come this week, the person said on condition of anonymity. Total compensation, including bonuses and other benefits, for the 25 highest-paid executives must be reduced by about 50 percent, the person said.
So maybe this administration is tryingto destroy the big banks by helping them?
CHICAGO (Reuters) – General Motors Co’s bid to find an outsider to replace its chief financial officer is being complicated by pay restrictions imposed on companies that got big U.S. government bailouts, The Wall Street Journal said on Saturday.
GM executives met recently with U.S. Treasury pay czar Kenneth Feinberg and left with the understanding the automaker would be able to offer a significant amount of stock but no more than a $1 million annual salary, the newspaper said, citing people familiar with the matter.
Sources have told Reuters that GM directors in September backed a plan for CFO Ray Young to leave the company.
GM emerged from bankruptcy in July after receiving $50 billion in emergency U.S. financing.
A spokesman for GM would not comment on whether the CFO search specifically was being hindered by the pay restrictions.
“We’ve consistently said that one challenge to filling any position from outside might be the pay restrictions,” GM spokesman Tom Wilkinson said.
We knew this was coming; the best and the brightest avoiding the government controlled companies for just this reason. I wonder how GM is going to pay us back when they go under for real?
The war to flip this country to socialism continues.
President Obama plans to nominate Ben S. Bernanke to a second term as chairman of the Federal Reserve, administration officials said Monday night.
The nomination, while expected, comes after Mr. Bernanke has had perhaps the most tumultuous term of any Fed chairman, helping to steer the economy through its greatest downturn since the 1930’s. Mr. Bernanke is a Republican who was appointed by President George W. Bush.
A top White House official said Mr. Obama had decided to keep Mr. Bernanke at the helm of the Fed because he had been bold and brilliant in his attempts to combat the financial crisis and the current deep economic recession.
Everybody read MarketTicker this morning? Bernanke and his buddies should be in jail; not being allowed to slurp at the trough for some 14 more years.
Let’s be clear: These banksters have robbed well over $100 billion dollars from taxpayers and citizens via various schemes in the last decade. These scams have included securitizing loans that they either knew or should have known were laced with fraud, in some cases shorting them while selling them on to other people. It includes outrageously-complex and intentionally-obfuscated securities “packages” for municipalities which have resulted in huge losses for the town (and huge fees and profits for the bank.) It has included marketing “auction rate” securities which were claimed to be as liquid and safe as cash, when in fact nothing of the sort was true. The schemes and scams run the gamut but at their core was the intentional obfuscation of the true nature of the risk embedded in these instruments so that the dupe (that would be you, your town, your state) would wind up losing money all for their benefit: you would enter into a complex swap transaction you didn’t understand, you’d buy a bubble house with an OptionARM after being told you “definitely” could refinance before payments would go up, your kid was sold an expensive educational loan package without being told that it was unable to be discharged in bankruptcy, you were given a credit card with 27 pages of fine print, and buried somewhere in there was vague language letting the company jack your interest rate to anything it wanted – including the 36% it did jack it to – if you missed an electric bill by three days.
Then, when the game of musical chairs ended and all this debt that could not possibly be paid off started to default these very same banksters went to Congress through Paulson and Bernanke, the chiefs of the bankster scam parade, and in my opinion literally committed economic terrorism: hand over $2 trillion dollars hiding all but $700 billion, or we detonate the entirety of the economy and everyone literally starves.
How does this differ from an old-fashioned Al-Quaida terrorist who calls in a nuclear bomb threat? “Hand over $2 trillion dollars or New York City will be vaporized.”
Hmmmmm… sounds kinda like the same thing to me!
Now let’s juxtapose this with the fact that every Congressperson took an oathto defend The Constitution against all enemies, both foreign and domestic.
So riddle me this my fellow Americans: How is it that Bernanke, Paulson, Geithner, and both Presidents Bush and Obama are still free men instead of being housed at GITMO? How is it that on that fateful night in September of 2008 when Bernanke and Paulson “briefed” Congress and demanded $700 billion in ransom and a blank check to back-door an unlimited amount in “guarantees” and “pass-throughs” to their banking buddies the Sargeant At Arms was not immediately called to place these goons under arrest pending indictment and prosecution?
Hank Paulson was a 32 year career Goldman Sachs soldier. He also ran the company as COO and CEO from 1998 through 2006 . . . the exact years that we saw the creation of toxic assets developed by his boys and girls at Goldman Sachs. He left Goldman Sachs at the peak of the bubble to take over the Treasury Secretary job so he could complete the final phase of his scheme . . . cover up, steal a few trillion more, laugh at you and the American public.
Hank Paulson being questioned by Mr. Stearns (FL) about the Bank of America merger with Merrill Lynch. I find the deferred tax issue consistent with the rest of the players now in positions of power, and it is nice to watch Hank squirm even if it is not going to have any real, lasting effect.
Remember when TARP 1 was supposed to be used to ease the credit crunch and free up money for small businesses? Remember when AIG was considered too big to fail? Now that $186 Billion Dollar Fiasco continues.
A timeline is in order, and I ask that you read this until you understand it. It is time to stop skimming and skipping. What is happening to our country is going on because we have told ourselves that the economic aspects of our lives are just too damn complex to understand. We have allowed people outside ourselves to brainwash us into thinking we are “too stupid”. This is one American that is telling you that 2+2=4, and that the bean counters using red crayons are just trying to brainwash you into thinking that you won’t ever “get it”. It’s pretty damn simple, just take the time, make the effort, ask questions! Unless Turbo Tax Timmie’s IQ approaches 160, he is not as smart as most of my readers.
The U.S. government seized control of American International Group Inc. — one of the world’s biggest insurers — in an $85 billion deal that signaled the intensity of its concerns about the danger a collapse could pose to the financial system.
The step marks a dramatic turnabout for the federal government, which had been strongly resisting overtures from AIG for an emergency loan or some intervention that would prevent the insurer from falling into bankruptcy. Just last weekend, the government essentially pulled the plug on Lehman Brothers Holdings Inc., allowing the big investment bank to go under instead of giving it financial support. This time, the government decided AIG truly was too big to fail.
It puts the government in control of a private insurer — a historic development, particularly considering that AIG isn’t directly regulated by the federal government. The Fed took the highly unusual step using legal authority granted in the Federal Reserve Act, which allows it to lend to nonbanks under “unusual and exigent” circumstances, something it invoked when Bear Stearns Cos. was rescued in March.
As part of the deal, Treasury Secretary Henry Paulson insisted that AIG’s chief executive, Robert Willumstad, step aside. Mr. Paulson personally told Mr. Willumstad the news in a phone call on Tuesday, according to a person familiar with the call.
Mr. Willumstad will be succeeded by Edward Liddy, the former head of insurer Allstate Corp. (Make sure to read this article near the end for info on Mr. Liddy.)
The final decision to help AIG came Tuesday as the federal government concluded it would be “catastrophic” to allow the insurer to fail, according to a person familiar with the matter. Over the weekend, federal officials had tried to get the private sector to pony up some funds. But when that effort failed, Fed Chairman Bernanke, New York Fed President Timothy Geithner and Treasury Secretary Paulson concluded that federal assistance was needed to avert an AIG bankruptcy, which they feared could have disastrous repercussions.
Staff from the Federal Reserve and Treasury worked on the plan through Monday night. President George W. Bush was briefed on the rescue Tuesday afternoon during a meeting of the President’s Working Group on Financial Markets.
Now, however, Mr. Willumstad himself will be leaving, after having been asked to step aside by the Treasury’s Mr. Paulson. Mr. Willumstad, who recently took over as AIG’s chief executive to try to turn around the firm, was surprised by the request. “If that’s what you want, I’ll do it,” he said to Mr. Paulson, according to a person familiar with the call. AIG’s board was unhappy with the decision but felt it had no choice but to go along, as the only other option was bankruptcy.
The fate of a corporate chief executive is normally the province of a board of directors. The decision by the Treasure Secretary to essentially oust Mr. Willumstad underscores further the magnitude of the government’s intervention.
Mr. Willumstad’s departure marks the end of a brief, tumultuous run. He joined AIG as a director in early 2006, after leaving the No. 2 post at Citigroup Inc., and became AIG’s chairman later that year. In June, as AIG was reeling from record losses, the board forced out Mr. Willumstad’s predecessor and gave him the top job. He had planned to unveil his own strategy for AIG on Sept. 25.
By tapping Mr. Liddy as AIG’s next CEO, the government is turning to someone with deep experience in the insurance industry, having served as chief executive of Allstate from 1999 to 2006. He stepped down as chairman earlier this year. Allstate is a different type of insurer than AIG, focusing on selling car and home insurance to Americans, whereas AIG sells an array of insurance policies to individuals and businesses world-wide.
Mr. Liddy also has experience pulling apart empires, having helped dismantle Sears, Roebuck & Co. (from which Allstate was spun off) in the 1990s. Before joining Sears, Mr. Liddy worked under Donald Rumsfeld at drug maker G.D. Searle & Co. Mr. Liddy is on the board at Goldman Sachs Group, the investment bank that Mr. Paulson led before becoming Treasury Secretary.
WASHINGTON/NEW YORK (Reuters) – The government restructured its bailout of American International Group Inc, raising the package to a record $150 billion with easier terms, after a smaller rescue plan failed to stabilize the ailing insurance giant.
The Federal Reserve and the Treasury Department announced the new plan on Monday as AIG reported a record third-quarter loss of $24.47 billion, largely from write-downs of investments.
The new package, at least $27 billion more than was previously extended, will leave the government exposed to billions of dollars of potential losses.
Under the new plan, the government will get a $40 billion equity stake in AIG, spend as much as $30 billion on securities underlying the insurer’s credit default swaps, and spend up to $22.5 billion to buy residential mortgage securities.
It will also reduce a previously announced credit line to $60 billion from $85 billion, and lower interest rates on borrowings. AIG will also accept curbs on executive pay,including a freeze of bonuses for its top 70 executives.
The $40 billion equity infusion comes from the $700 billion financial bailout package passed into law last month.
That package was originally intended for banks, and AIG is the first company other than a bank to get money from it. It was created after the government announced the original $85 billion bailout package for AIG on September 16.
“Today’s action was a one-off event,” Neel Kashkari, the Treasury Department’s interim assistant secretary for financial stability, said at a conference in New York. “It is not the start of a new program.”
NEW YORK (Reuters) – Where, oh where, did AIG’s bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published.
The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.
The newspaper reported that some of the banks paid by AIG since the insurer started getting taxpayer funds were: Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group. (With a few exceptions, almost every one of these institutions has been here reading the Monster…)
Morgan Stanley and Goldman Sachs declined to comment when contacted by Reuters. Bank of America, Calyon, and Wells Fargo, which has absorbed Wachovia, could not be reached for comment.
The U.S. Federal Reserve has refused to publicize a list of AIG’s derivative counterparties and what they have been paid since the bailout, riling the U.S. Senate Banking Committee.
Federal Reserve Vice Chairman Donald Kohn testified before that committee on Thursday that revealing names risked jeopardizing AIG’s continuing business. Kohn said there were millions of counterparties around the globe, including pension funds and U.S. households.
He said the intention was not to protect AIG or its counterparties, but to prevent the spread of AIG’s infection.
The Wall Street Journal, citing a confidential document and people familiar with the matter, reported that Goldman Sachs and Deutsche Bank each got about $6 billion in payments between the middle of September and December last year.
Once the world’s largest insurer, AIG has been described by the United States as being too extensively intertwined with the global financial system to be allowed to fail.
The Federal Reserve first rode to AIG’s rescue in September with an $85 billion credit line after losses from toxic investments, many of which were mortgage related, and collateral demands from banks, left AIG staring down bankruptcy.
Late last year, the rescue packaged was increased to $150 billion. The bailout was overhauled again a week ago to offer the insurer an additional $30 billion in equity.
AIG was first bailed out shortly after investment bank Lehman Brothers was allowed to fail and brokerage Merrill Lynch sold itself to Bank of America Corp.
Bankruptcy for AIG would have led to complications and losses for financial institutions around the world doing business with the company and policy holders that AIG insured against losses.
Representative Paul Kanjorski told Reuters on Thursday that he had been informed that a large number of AIG’s counterparties were European.
“That’s why we could not allow AIG to fail as we allowed Lehman to fail, because that would have precipitated the failure of the European banking system,” said Kanjorski, a Democrat from Pennsylvania who chairs the House Insurance Subcommittee.
From one Sunday talk show to the next, they tore into the contracts that American International Group asserted had to be honored, to the tune of about $165 million and payable to executives by Sunday — part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue.
In a letter to Geithner dated Saturday, Liddy said outside lawyers had informed the company that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so. (What about the ban on bonuses as part of the original bailout in September? Go back to the top for that quote.)
Liddy said in his letter that “quite frankly, AIG’s hands are tied,” although he said that in light of the company’s current situation he found it “distasteful and difficult” to recommend going forward with the payments.
Liddy said the company had entered into the bonus agreements in early 2008 before AIG got into severe financial straits and was forced to obtain a government bailout last fall.
The bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.
March 15, 2009: (ARE YOU READY FOR THIS? Do not EVEN try to tell me that the “New World Order Central Bank Theory” is a conspiracy.)
WASHINGTON/NEW YORK (Reuters) – More than half of the taxpayer money spent to rescue insurer AIG was passed on to Goldman Sachs and several European banks, who benefited from more than $90 billion in payments in the first three-and-a-half months of the government bailout, AIG disclosed on Sunday.
The revelation was another public relations nightmare, coming on the same weekend that the Obama administration expressed outrage over American International Group Inc’s plan to pay massive bonuses to the people in the very division that destroyed the company by issuing billions of dollars in derivatives insuring risky assets.
AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.
As part of those efforts, Obama will announce steps on Monday to make it easier for small business owners to borrow money, officials said. (…and this is what they should have been doing all along!)
But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs — one of Wall Street’s most politically connected firms — and to European banks including Deutsche Bank, France’s Societe Generale and the UK’s Barclays was likely to stoke further outrage at the entire U.S. bank bailout.
While the payments were not illegal, the fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary. (Ya Think?)
Goldman Sachs, formerly led by Henry Paulson who was treasury secretary at the time of the original AIG bailout, could not immediately be reached for comment. Deutsche Bank and Barclays declined to comment.
As it seeks to ease the credit crunch that was the original target of the Troubled Assets Relief Program (TARP), the Treasury will also offer more details this week about the workings of proposed public-private partnerships to take toxic assets off banks’ books, including a timeframe, a senior department official said on Saturday. (Remember TARP 1 was to ease the credit crunch?)
Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.
The list of counterparties was made public by AIG amid growing pressure on the insurer to come clean about the true beneficiaries of the bailout ahead of a congressional hearing on Wednesday at which AIG chief executive Edward Liddy is slated to testify.
NEW YORK (AP) — American International Group Inc. used more than $90 billion in federal aid to pay out foreign and domestic banks, some of whom had received their own multibillion-dollar U.S. government bailouts.
The embattled insurer’s disclosure on Sunday came amid outrage on Capitol Hill over its payment of tens of millions in executive bonuses, and followed demands from lawmakers that the names of trading partners who indirectly benefited from federal aid to AIG be made public.
The company, now about 80 percent owned by U.S. taxpayers, has received roughly $170 billion from the government, which feared that its collapse could cause widespread damage to banks and consumers around the globe.
“The ability of AIG to meet its obligations is important to the stability of the U.S. financial system and to getting credit flowing to households and businesses,” Federal Reserve spokeswoman Michelle Smith said.
Some of the biggest recipients of the AIG money were Goldman Sachs at $12.9 billion, and three European banks – France’s Societe Generale at $11.9 billion, Germany’s Deutsche Bank at $11.8 billion, and Britain’s Barclays PLC at $8.5 billion. Merrill Lynch, which also is undergoing federal scrutiny of its bonus plans, received $6.8 billion as of Dec. 31.
The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions.
Other banks receiving between $1 billion and $3 billion from AIG’s securities lending unit include Citigroup Inc., Switzerland’s UBS AG and Morgan Stanley.
Municipalities in certain states, including California, Virginia and Hawaii, received a total of $12.1 billion under guaranteed investment agreements.
Our government and the privately held Federal Reserve Banking Cartel give money to AIG, and they gave it to not only FOREIGN BANKS, but they gave it to other American Banks that already were getting bailed out by us. What are we going to do about it?