AIG Headlines – Moon of Alabama

March 20, 2009

AIG Headlines

Today's headlines:

Funny in its own way, especially the last two.

And a nice distraction from the new TALF program launched today with which the Fed will lend out money to hedge funds and shadow banks while taking about anything, including used photocopiers and cars, as collateral. The funds will use this scheme to get rid of their toxic 'assets' and the taxpayer will have to eat the losses.

Posted by b on March 20, 2009 at 14:32 UTC | Permalink

Comments

It’s going to be a long hot summer (and I’m not talking about the temperature).

Posted by: D. Mathews | Mar 20 2009 14:39 utc | 1

MATT TAIBBI in Rolling Stone: The Big Takeover
The global economic crisis isn’t about money – it’s about power. How Wall Street insiders are using the bailout to stage a revolution
It is a long piece with lost of details told well. I recommend to print it out an later give to your children and grandchildren. Then they will at least know why they have to pay up for this.

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else’s financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its “pneumonia” was making colossal, world-sinking $500 billion bets with money it didn’t have, in a toxic and completely unregulated derivatives market.
Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.
People are pissed off about this financial crisis, and about this bailout, but they’re not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d’état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.
…
The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
…
When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what’s happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. “We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion,” says Sen. Bernie Sanders. “It is beyond comprehension.”
…

God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. “This is exactly what the financial system needs,” said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren’t many people who don’t run hedge funds who have expressed anything like that kind of enthusiasm for Geithner’s ideas.
As complex as all the finances are, the politics aren’t hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
…
These people were never about anything except turning money into money, in order to get more money; valueswise they’re on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.
Good luck with that, America. And enjoy tax season.

Posted by: b | Mar 20 2009 16:35 utc | 2

Obama compares AIG, big banks to “suicide bombers”

The president said that if the local community bank, Fullerton Community Bank, failed, “We’ve got something called the FDIC, the Federal Deposit Insurance Corporation, that would take it over, it would guarantee all the deposits so you don’t have to worry about your deposits. They are not at risk. And it would be able to kind of sort things out and then resell the bank fairly quickly and it doesn’t threaten the system as a whole.”
Bigger banks, however, “Citicorp or Bank of America or, you know, Wells Fargo that controls 70 percent of the banking system, and all of them are weakening, you can’t afford to have all those banks all at once start going under. Even though the deposits might be guaranteed, you’ve got the entire economy resting on that credit.”
The president said, “It was the right thing to do, even though it’s infuriating, even though it makes you angry because you’re thinking, ‘I was responsible and these folks are irresponsible and somehow I’m paying for them.’ The same is true with AIG. It was the right thing to do to step in.”
“Here’s the problem,” Mr. Obama said, “It’s almost like they’ve got — they’ve got a bomb strapped to them and they’ve got their hand on the trigger. You don’t want them to blow up. But you’ve got to kind of talk them, ease that finger off the trigger.”

Question is, do we put them all on the ‘no fly list’? If not, why not?

Posted by: Uncle $cam | Mar 20 2009 17:20 utc | 3

Like I said when I first heard O hired the jedi class warrior Summers, it’s over for O.
What a tragedy.

Posted by: slothrop | Mar 20 2009 17:37 utc | 4

(CNN) — Ten U.S. Muslim organizations threatened this week to cease working with the FBI, citing “McCarthy-era tactics” by the agency, including efforts to covertly infiltrate California mosques.
The groups claim the FBI has sent undercover agents posing as worshippers into mosques, pressured Muslims to become informants, labeled civil rights advocates as criminals and spread misinformation.
The FBI declined to comment on specific allegations but called the proposed move unproductive.
“Limiting honest dialogue, especially when complex issues are on the table, is generally not an effective advocacy strategy,” spokesman John Miller said in a statement.
—
God forbid we’re “unproductive,” as they shuffle US off onto their No Thrive gulags.
—
Karl Marx on the Apartheid Bailout:
I don’t think that one has to go that far because at the end of the day, I don’t think the majority of global capital elites want to see themselves responsible for the People. They do not want to control the People. It’s unnecessary. What they do want is to care for their bonuses, for their Class A shares settlements and for market areas which are deregulated and to have their mercenary interests served well. But also to take under their responsibility these People which, they believe, are not the most productive on earth, would become a burden to their bottom line profits. They want to relieve themselves of the burden of the People – not property, not capital. It is real estate and finance they want to preserve, but the Lower Class they want to rid themselves of, the proletariat and the peasants.
There are plenty of gentrifi-takers waiting when the Great Liquidation begins.

Posted by: Clark Agrue | Mar 20 2009 17:58 utc | 5

Thx for the Taibbi link, b.
in the article, he references Michael Milken as the teacher of AIG’s point guy on the CDO/CDS morass. This perked my brain as I’d referenced Milken and the book “Den of Thieves” in a previous comment. In that book, Milken and Robert Rubin are connected (via Citibank, if memory serves), so it’s logical (IMHO) that a connection exists between AIG, and Rubin, who currently sits as an adviser to the Prez.
I’m working on an “All Roads Lead to Rubin” theme, but am limited right now in my research time. It seems it would be an appropriate post to make around now, though….

Posted by: Jeremiah | Mar 20 2009 18:05 utc | 6

Uncle $cam@3
Question is, do we put them all on the ‘no fly list’? If not, why not?
Because the elite fly in corporate jets. They just have the limo drive onto the tarmac, then they walk up the plane’s stairs, sit down in the nice kid leather seat, pour a glass of sparkling wine, sit back and smirk as they look at the peons walking up stairs like cattle lumbering up a chute and into a waiting truck.
I’m reminded of enron or any number of other financial misdeeds by wall street in that everyday new allegations of malfeasance are leveled against more people/institutions and it becomes harder and harder to keep track of it all.
It seems that everyone who is now in charge of fixing the current multitude of problems are themselves somehow tied to the original lawlessness to the point I doubt there will be justice or even the smallest amount of open accounting of who did what when why where or to whom. If the past is any guide, a few of the dumber/greedier will take the fall as the rest laugh and cash checks written in the sweat of our labor, while we bail ourselves out once more with tax dollars (or our children’s children bail us out…)
I’m both angry and resigned about history repeating like a damn record with the needle stuck in the groove, or a cd skipping on madonna singing, “I’m a material girl…” over and over and over.
Americans need to ask themselves why there is always money to bail out wall street, there is always money for more advanced and expensive ways of killing, but there is never any money for health care, child care or any other human care.
Rrrr!

Posted by: d.13 | Mar 21 2009 3:40 utc | 7

The media waking up on TALF?
Toxic Asset Plan Foresees Big Subsidies for Investors

The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.
The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.
…
The plan to be announced next week involves three separate approaches. In one, the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money that those partnerships will need to buy up troubled assets that banks want to sell.
In the second, the Treasury will hire four or five investment management firms, matching the private money that each of the firms puts up on a dollar-for-dollar basis with government money.
In the third piece, the Treasury plans to expand lending through the Term Asset-Backed Securities Loan Facility, a joint venture with the Federal Reserve.
…
Although the details of the F.D.I.C. part were still being completed on Friday, it is expected that the government will provide the overwhelming bulk of the money — possibly more than 95 percent — through loans or direct investments of taxpayer money.

Socializing the losses writ large …

Posted by: b | Mar 21 2009 5:33 utc | 8

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