This is the document the Congressman was talking about during his opening remarks in today’s committee interviews —
It was dubbed confidential by the SEC at the NYFRB’s request until 2018, and subsequently uncovered via committee subpoena.
click for pdf
Hat tip Dylan!
UPDATE: Huff Po has more
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
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"The Greek offer is not sufficient and they have to go away to come up with a revised plan," said a spokesman for the German Finance Ministry. The Greeks must first have a plan that satisfies the Germans which this comment states they clearly don't yet and then the Greek Parliament will vote on it this weekend. This said, whatever package gets voted on in Greece is basically an up or down vote on euro membership so we are entering another uncertain weekend for global markets. A failed vote will likely lead to a hard default which may be what...
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January 27th, 2010 at 3:35 pm
Priceless comment on the HuffPo post:
“Treachery Secretary Timothy Geithner”
January 27th, 2010 at 3:36 pm
You bastard!
You divulged confidential information that will surely destroy the economy, put helpless women and children into food lines, give aid and comfort to terrorists throughout the world, aid the liberal cause, and crush the financial markets now that These State Secrets are known publicly. Little old ladies who used to have savings accounts will now have to live on dried dog food until Death mercifully takes them to the other side. Have you no feeling? What the Hell is wrong with you?
Pardon me while I go off to lament about the Horrors that will surely soon be facing us. Terrorist!
January 27th, 2010 at 3:39 pm
So, this is the document the Fed “sealed” until 2018?
And all these counterparties were made good at 100 cents on the dollar, courtesy of Joe & Jane Taxpayer.
Hhmmm.
.
January 27th, 2010 at 3:41 pm
Un Farkin Believable!
January 27th, 2010 at 3:44 pm
The only secrets were the marks.
January 27th, 2010 at 3:53 pm
Can you post this on line and/or with Markit and get real Markets? Free Markets for Free People.
January 27th, 2010 at 4:21 pm
Wow! Unbelievable! Hooray, we’re saved!
[Can anybody translate this shit for me?]
January 27th, 2010 at 4:25 pm
It sure seemed like we bailed out the European banking system. And lookie here. We did.
January 27th, 2010 at 4:31 pm
Hank never saw it.
January 27th, 2010 at 4:32 pm
Your request is being processed…
David Fiderer
David Fiderer
How Paulson’s People Colluded With Goldman to Destroy AIG And Get A Backdoor Bailout
Your request is being processed…
David Fiderer
Banker/Writer
How Paulson’s People Colluded With Goldman to Destroy AIG And Get A Backdoor Bailout
David Fiderer
Banker/Writer
Too Big To Fail is revelatory, though not in the way Andrew Ross Sorkin intended. The book offers startling evidence that Hank Paulson and his deputies colluded with Goldman to create a liquidity crisis at AIG, and to manipulate the government funding a backdoor bailout of AIG’s CDO counterparties, most notably Goldman. It’s not that Sorkin’s sources recounted the truth. Quite the opposite. Rather, they told him stories that were so transparently dishonest that the truth
emerges by way of negative implication.
To understand what happened, you need to remember that the top guys at Goldman are really, really smart. They are like champion chess players who anticipate the possible moves of their opponent. The guys at Goldman can quickly grasp how pieces of a financial transaction work together, like the pieces on a chessboard, to game out different scenarios. This attribute is not unique to the guys at Goldman; it’s an essential quality of every good banker. But it does mean that the guys at Goldman cannot credibly profess to being oblivious.
The other thing that you must remember is that the dagger hanging over AIG and Goldman — the eventual payout to the CDO counterparties — was a zero-sum game between the two financial giants. On June 30, 2008, AIG’s net worth was $79 billion and its CDO obligations totaled $62 billion. On August 27, 2008 Goldman’s net worth was $42 billion and its share of the infamous CDO portfolio was $22 billion. The stakes were huge.
More of article at….
http://www.huffingtonpost.com/david-fiderer/how-paulsons-people-collu_b_435549.html
January 27th, 2010 at 4:32 pm
Transor Z Says:
January 27th, 2010 at 4:21 pm
Wow! Unbelievable! Hooray, we’re saved!
[Can anybody translate this shit for me?]
Yes:
———–
Somebody paid too much for something and they need to keep it a secret for so long that nobody cares or they are long gone. It suggests the possibility of insider dealings or favors to friends. It implies that the DOJ can’t figure it out or hasn’t been forced to piss on somebody’s leg yet, and therefore someone or some group is home free if the statute of limitations expires before the shit hits the fan. Uncle Stupid is a willing conspirator in a cover-up of something yet to be explained.
January 27th, 2010 at 4:38 pm
Sorry about that garbled post…don’t know what happened. Anyway the article is an excellent read and easy to understand the step-by-step process of what went on between Goldman and AIG. For those of us who have trouble understanding the complications of the CDO’s and the financial transactions Fiderer walks the reader through so that most folks who aren’t traders can understand (finally) what was going on with the “Hair on Fire…Give Me Money Now” hysteria that Paulson and the rest were pushing to get our taxpayers dollars.
January 27th, 2010 at 4:44 pm
Well hurray. At least there are still some not willing to be co-conspirators.
Ooops. Maybe one of those poor guys that got canned so that the elites could get their megabonuses ratted.
Justice? Not yet. But if I were some of those fraudsters I might start having trouble sleeping well.
Who knows what evil lurks in the form of documents and emails yet to be revealed.
I’d say the SEC even with its new head is just about as useless as tits on a boar hog.
But we pay their freight so they can “protect” us.
I say sack ‘em all.
And the FBI? Don’t bet on it. The head’s no idiot. BSO can be a master of subtle persuasion when he holds pocket resignations for all these bastards.
January 27th, 2010 at 4:49 pm
TakBak04 Says:
January 27th, 2010 at 4:38 pm
… so that most folks who aren’t traders can understand (finally) what was going on with the “Hair on Fire…Give Me Money Now” hysteria that Paulson and the rest were pushing to get our taxpayers dollars.
reply:
———
They fooled me back then but now not so much. I no longer think that the world is so fragile that some bad news about a bank will ruin the world. If it can then the wrong people are running the world’s financial systems. Bernanke is a dolt who needs to be put in jail for criminal stupidity, although I’d settle for fired. Our national bankers need to be smarter since the thieves are so good at what they do. The stupid run the banks and are the regulators while the crooks hire the best and the brightest.
In reality, nothing much will change and the next pump will come soon and will be a great opportunity. Of course, the world will end if the next pump doesn’t happen. Wall street will prosper and main street will exist.
January 27th, 2010 at 4:56 pm
Uncle Stupid is a willing conspirator in a cover-up of something yet to be explained.
@DH: I go on gut a lot and my gut tells me there’s truth in that sentence. Trying to teach myself the basics of structured finance on the fly so I can follow the game on the field just feels like I’m missing the forest for the trees.
We still don’t know The Big Thing that Bernanke, Geithner, and Paulson are playing hide-the-ball and distancing themselves from. It definitely involves AIG. But we’re not there yet.
January 27th, 2010 at 4:59 pm
Wow, they were really going to take a haircut. But it wasn’t so dire that they were going to recover nothing. Indeed, AIG was going to have to be broken apart, with the bad parts being worked on, while the good parts continuing to operate. Gross mismanagement at its worst, but not the end of the world, as we all knew then, and we still know now. For GOLDMAN, it was another story. So, who better to tell us the world is ending than a legacy Goldman guy? Damn, America is stoopid.
Let this be a lesson to us all: real wealth and thereby freedom comes from a combination of skill and LUCK, with the latter being 70% of the equation. I hope LUCK is on each of your sides!
January 27th, 2010 at 5:11 pm
wonder if TG is cleaning out his desk? I am thinking O isn’t that lenient, not like B was any way. and maybe the big B isn’t going to confirmed after all?
January 27th, 2010 at 5:13 pm
just paper-
plenty more where that came from
January 27th, 2010 at 5:14 pm
Transor Z Says:
January 27th, 2010 at 4:56 pm
We still don’t know The Big Thing that Bernanke, Geithner, and Paulson are playing hide-the-ball and distancing themselves from. It definitely involves AIG. But we’re not there yet.
Reply:
————
I’ve come to learn a simple truth … the explanation for complicated problems isn’t very complicated. In a lot of cases there really are simple answers for complicated questions.
In this case …
It’s easy to steal big if you have Government on your side. You put your people in Government, either by design or by putting stupid and easy to manipulate people in government. Bernanke is a good example of stupid and easy to manipulate. He has a dogmatic belief in the academic explanation of markets, he has a Pavlovian response to the great depression (free money and lots of it), and he is naive. He is easy to control. You confound the regulators by demanding fairness to financial innovation. You stall. The current hearing might even be a part of the stall since it is likely nothing of significance will happen due to them. You get the picture?
It’s a simple problem and the government will never deal with it on the terms of main street. QE2 is on the way soon, to prevent the end of the world.
January 27th, 2010 at 5:16 pm
Thomas Baxter’s testimony today on maintaining secrecy around Schedule-A:
Cover to “explain” why the CC-rated holdings will be sold at a serious loss in 6-10 years and the taxpayer will lose money — because we’re going to be “gamed” by “sophisticated players” when the time comes.
N.B. – All of his assertions on this p0int were qualified as being “what I am told by our experts at Blackrock.”
CYA within CYA within CYA
Cuz that’s how the big boys downtown roll.
January 27th, 2010 at 5:24 pm
dead hobo Says:
January 27th, 2010 at 5:14 pm
It’s a simple problem and the government will never deal with it on the terms of main street. QE2 is on the way soon, to prevent the end of the world.
PS:
———
My timing usually sucks but my prognostications are spot on. Expect a double dip after QE1 times out and a heroic QE2 to save the world as a demanded response. Cha-Ching for Wall Street, and a U6 of 20%+
January 27th, 2010 at 5:27 pm
@dh: All I can say is “good stuff.”
January 27th, 2010 at 5:30 pm
did Issa just release this on his own? that’s pretty shocking
January 27th, 2010 at 5:38 pm
testimony- Geithner says:
“I had no role in making decisions regarding what to disclose about the specific financial terms of Maiden Lane II and Maiden Lane III, and payments to AIGs counterparties.”
testimony- Thomas Baxter- NY Fed General Counsel says-Geithner signed off on paying AIG counterparties at par.
Geithner’s head explodes
January 27th, 2010 at 5:39 pm
ahab – geithner didn’t deny that he was a part of the decision to pay counterparties at par. he said he was not involved in the decisions about disclosing the counterparty payments
January 27th, 2010 at 5:48 pm
KD-
good point- but I wanted to fit that punch line in- best I could come up with
DH says-
“My timing usually sucks”
but your picks are right?
“heroic QE2 to save the world”
I think they push to convert 401k’s and IRA’s to “safe” treasury accounts and slap 100% withdrawal penalties for all those who refuse to convert
January 27th, 2010 at 5:49 pm
KidDynamite Says:
January 27th, 2010 at 5:39 pm
ahab – geithner didn’t deny that he was a part of the decision to pay counterparties at par. he said he was not involved in the decisions about disclosing the counterparty payments
reply:
——–
I did NOT shoot that gun. I denied it’s existence. I told my index finger to recuse the rest of my body. I had no idea my finger would pull that trigger. My finger is responsible for that crime, not me. I only knew about what my finger did well after the fact. I only wish I could have done something about it if I had only known. Bad finger.
January 27th, 2010 at 5:50 pm
I think what scared the crap out of them was the electronic bank run caused by Lehman’s collapse. Money market funds were hit hard and couldn’t hold the $1.00 share price. This would have started triggering all the counter-party bets. As I recall, it was happening quickly — program trading by stupid computers with as much intelligence as the people running these scams.
Have I got this right?
January 27th, 2010 at 5:59 pm
Darmah-
so . . .armageddon because the MM would “break” the buck?
and to think Berlin and Dresden made it-
I guess obliteration by Soveit tanks and carpet bombing got nothing on fiat
January 27th, 2010 at 6:01 pm
edit – Soviet
January 27th, 2010 at 6:04 pm
Which tranche was the best position for AIG’s counterparty?
I printed this out when it went up, started reading it. Thought “which is the best possition” read half way through then realized I don’t have time for this today.
Crisis porn will have to wait until late this evening. Hmmmm Crisis Porn, by now it’s kind of like a copy of playboy from the month you we’re born.
Can anyone satisfy me before then.
Were all these positions created when the CDO created or later?
Are these the original counterparties?
ec…..
Bit more work than first glance.
January 27th, 2010 at 6:14 pm
ahab – I may have some of this wrong. The electronic run was on bonds; bonds supporting money market funds. Funds were started to crack below $1. The selling would have started triggering the side bets or insurance or whatever you want to call it (rich-pricks-getting-richer-for-productive-reason methinks).
So, not the breaking the buck; just all the selling of the bonds/securities.
That’s kinda my understanding of what freaked them out. Of course I could easily be completely wrong.
January 27th, 2010 at 6:14 pm
If you haven’t read it…Read THIS…it’s a good PRIMER for what BR posted: Or Bookmark it and read over weekend or downtime. It’s a Good One!
—–
How Paulson’s People Colluded With Goldman to Destroy AIG And Get A Backdoor Bailout by David Fiderer
http://www.huffingtonpost.com/david-fiderer/how-paulsons-people-collu_b_435549.html
January 27th, 2010 at 6:21 pm
Can someone in the biz answer a question about page 3.
All those small positions on lower trances of the same deal jump out as looking like part of one of those “side letter” agreements that were never meant to be honored. So your risk profile would look better.
January 27th, 2010 at 6:23 pm
ZH is doing the reverse-engineering on it. Pretty innaresting.
January 27th, 2010 at 6:25 pm
Dharma-
you’re right- by breaking the buck – panic runs on money market funds occurred and the find manager’s had to liquidate assets to cover redemptions-
sure is a good thing that may be a thing of the past- in the new financial regultions being proposed- fund managers can refuse redemptions if they think it is harmful to the fund- don’t remember the precise language- but anyway-
good luck to anyone trying to get their money out
January 27th, 2010 at 6:44 pm
vachon,
Thanks, looks like it will take a while to go through it.
Do you want to bet everyone will just keep screaming “Evil GS!!!!!!”. Everyone else on this list is loving GS hate mongering right now. GS going private isn’t a far ferched as it was a couple months ago.
The outrage here is that this market blew up in Feb 07. I stopped watching Markit’s ABX by May 07.
Over a year and a half to deal with the problem and nothing happened.
January 27th, 2010 at 6:50 pm
@dead hobo
You know, information like this would be considered state secrets in China.
Then again, basic economic data is a state secret in China.
January 27th, 2010 at 6:52 pm
ZH’s point on the amortorization is the type of thing that is fucking crazy.
What monkey was writing the checks over there?
One without pants I presume.
January 27th, 2010 at 6:56 pm
well, if the department of justice, ie, mr holder is not on this in a week, we know who does really run the gubment……………………..the fed bought the crappiest of crap at full price, goldman should be broken up, this is as bad as enron and arthur anderson
January 27th, 2010 at 7:24 pm
“The way the AIG bailout was engineered was to specifically benefit Goldman Sachs and its trading partners,” said Janet Tavakoli, a Chicago-based derivatives expert and founder of Tavakoli Structured Finance. “Goldman’s past and present officers used crony capitalism to put their own interests ahead of the public.
Can’t we get Hank Paulson and Janet Tavakoli on the same stage at the same time in front of an audience so we can hear both sides of their arguments? (How about online if not on stage?)
January 27th, 2010 at 7:28 pm
huffington post, we paid 14 billion for shit that was worth 6 billion, in that year goldman made 1.8 billion, what does that tell you, without that bailout goldman is down and out and dead headed into the ground like wiley coyote’
January 27th, 2010 at 8:21 pm
I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan, but our own fiscal irresponsibility
—David Walker, former comptroller of the United States
http://www.youtube.com/watch?v=UuCgxDbOgqM
January 27th, 2010 at 8:47 pm
@willid3 Says:
January 27th, 2010 at 5:11 pm
wonder if TG is cleaning out his desk? I am thinking O isn’t that lenient, not like B was any way. and maybe the big B isn’t going to confirmed after all?
——-
Sorry to say this…but if I was a jury member and Geithner was on trial for a some trivial offense…..just his body language and obfuscation of his role in all of this would have me questioning anything out of his mouth…and I would probably vote to CONVICT!
Now…I have to pull back and wonder if he’s really just a guy who doesn’t know the meaning of “ethics” and doesn’t know what “moral compass” in dealing through one’s life and figure he needs a pass. But, does being “clueless” mean that one isn’t ever held accountable for ANYTHING these days?
Maybe I’m “old school.” Grandpa said: “A man’s word is his honor.” I think Granpa was living in a different time when trading a cow or horse meant a “handshake was a bond” and if the guy F**ked You….then you got the gun and went after him.
These days…we don’t have that kind of system and we are much more sophisticated in how we bring people to justice.
WHERE IS THE the JUSTICE for ANY of these folks who STOLE OUR MONEY?
Geithner is a Poster Boy for the “twitchy, grimacing criminal….hiding his avarice and greed under a (who did this “not me! “) attitude which leaves open that he is being “wrongfully set up” for the misdeeds of others… It’s been the defense of clever folks for centuries. Should we really go against a guy who is so totally “clueless” he doesn’t know how bad he f**ked up….when in fact TIMMEH would say: “Others were involved and we were SAVING AMERICA!” It’s the defense we’ve been hearing a lot of for the last decade. “Who Could Have Known?” Remember that one.
January 27th, 2010 at 8:58 pm
@takbak04: No prosecution. Timmy is an elite. Jail time? No way. Tax evasion. Ooops. No fine or penalty.
Trial? Don’t think so.
He does what he deems in his best interests and those of his capos. And because he’s a VIP. That’s all that matters. He is smart enough to leave a minimal trail (leave the meeting). But my sense is someone’s got the goods. Just not enough money or jail time on the table yet.
The way it works in Chicago, the city that works, ask BSO, you have to nail a smaller guy, and then get him to spill on the big guy. But only after he gets protection, including an identity change, and his own Caribbean island. Because the big guys don’t take prisoners. Just ask Foster.
AS MEH would say: x2 for Paulsen.
Be interesting to see if the TV drama results in more than higher ratings.
January 27th, 2010 at 9:04 pm
DeadHobo
“They fooled me back then but now not so much. I no longer think that the world is so fragile that some bad news about a bank will ruin the world. ”
do you remember the week the Commercial Paper market disappeared?
January 27th, 2010 at 9:15 pm
@alfred e Says:
Be interesting to see if the TV drama results in more than higher ratings.
———
Truly…that’s what it’s all about…and maybe Timmeh goes home and watches those “Reality Shows” just to get a break from it all…and he’s just acting out a part in all of this that goes just the way you say. A “book contract” on “How I got Wronged” and a side deal with his wife and child about how his “reputation was ruined…when all I was doing was Saving America!”
It’s kind of how things work these days…but it doesn’t mean that the “rest of us” have to tolerate it by giving up and joining in with them…or becoming so cynical we just give up and snark, either.
Who knows.. More and more keeps bubbling out of our sewers about what’s been going on. People will make of it what they will. But, APATHY is the ENEMY of making things work again…is what I think.
January 27th, 2010 at 10:24 pm
Maybe they should just nationalize Goldman. With the profits they are making the government books would be balanced in a couple years
January 28th, 2010 at 7:07 am
>>> maybe Timmeh goes home and watches those “Reality Shows” just to get a break from it all…
I would suggest “Pawn Stars.” Serious allegory on the ability to judge the value of collateral. Watch it and laugh at two levels.