2008 Geithner to AIG on Goldman: Shhhhh!
This is simply infuriating:
“The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.
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.”
Between Summers and Geithner, it appears that President Obama has made the exact same mistake that one George W. Bush did: Instead of filling his administration’s most important posts with his own people, he reached back to prior admins (Cheney, Rumsfeld, etc) and loaded up on incompetent retreads.
Barack W. Obama indeed . . .
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UPDATE: Some of the emails in question can be found at Dealbook.
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Source:
Geithner’s New York Fed Told AIG to Limit Swaps Disclosure
Hugh Son
Bloomberg, Jan. 7 2010
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXIvW4igKV38
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January 7th, 2010 at 7:07 am
BR: WADR, Let me ask you a question.
What percentage of actual input do you think TheBamster (or Bush, or C linton, or Bush I, or Reagan, or Nixon, or Kennedy, etc) has or had or will have in selecting their appointees?
Is it your position that this country is actually “led” by TheBamster (or Bush, or Clinton….)?
Do you really think that it is his “mistake” to do what he does? Or does it just appear that way?
Surely an investor with your level of sophistication cannot hold with the belief, the utter nonsense that the POTUS is the leader of the Free World but instead is a mere puppet in the hands of the real power in this world.
January 7th, 2010 at 7:47 am
true point flipspiceland… There are other people behind the curtain that will selectpeople like that…
January 7th, 2010 at 8:14 am
Geithner and Summers are tres competent. NOT incompetent. They are after all doing G-d’s work!
Where are the populists when the people are hurting?
January 7th, 2010 at 8:16 am
Well, I’m glad that in this modern age, we communicate in a manner – emails – that allow for subsequent tracking of conversations held in the past (assuming nobody tries to destroy said records). It may not stop the funny business, nor result in prosecution, but it makes clear the power relations that exist.
January 7th, 2010 at 8:32 am
“Between Summers and Geithner, it appears that President Obama has made the exact same mistake that one George W. Bush did: Instead of filling his administration’s most important posts with his own people, he reached back to prior admins (Cheney, Rumsfeld, etc) and loaded up on incompetent retreads.”
BR,
hasn’t this been obvious since 44′s 1st Draft Pick, Rahm Emanuel?
or, maybe, the AG, ‘Bag’ Holder?
c’mon, really?
January 7th, 2010 at 8:35 am
It simply cements the fact that the country has been captured by large corporations and special interests. It transcends party affiliations and ideology and is evident at all levels. Be it elected or appointed officials at Federal, State or local municipalities, Unions or other organized and funded groups, it has no boundaries. The ‘system’ be it economic or political is run by the few for the few. Any changes to this arrangement will not be made organically.
January 7th, 2010 at 9:02 am
“…Earlier that month, Fed Vice Chairman Donald Kohn testified to Congress that disclosure of the counterparties would harm AIG’s ability to do business. The insurer agreed to turn over a stake of almost 80 percent in connection to its bailout…”
Looks to me like a prudent attempt to stop runs on other banks. The amounts were known, it’s only the detailed disclosures weren’t made.
I’m glad they acted prudently. I agree with Kohn’s assessment …oh, and it worked.
January 7th, 2010 at 9:39 am
I am so upset over this issue. I thought we had done a great job in electing this progressive man – but where it matters most – in repairing the banking system, Obama has sold out to Wall Street.
I don’t believe he is ignorant, and I just cannot fathom how he was sold this particular bill of goods.
Please publicize this story where ever you can. Please. Maybe the administration will think more deeply on allowing those dunderheads (Tim and Larry) to remain in power.
January 7th, 2010 at 9:52 am
Are we really surprised anymore?
January 7th, 2010 at 10:08 am
Not surprising.
All of the Democrat/Republican bitch slapping that is constantly grabbing the headlines is simply a distraction from the fact that this country is run by a non-elected Corporatocracy.
Time to burn it all down and start over again.
January 7th, 2010 at 11:35 am
Now it looks like another Obama appointee, recently engaged Peter Orswag, just knocked up a gal who is not his wife to be…gotta love those Democrats! http://voices.washingtonpost.com/reliable-source/2010/01/peter_orszag_just_engaged_ackn.html?hpid=artslot
January 7th, 2010 at 11:39 am
Some of these comments warm my heart and give me hope.
Our country has been captured by the corporations… some may refer to it as Corporatocracy, I think Mussolini had a different word for it…
See Also: Strauss, Leo
January 7th, 2010 at 11:52 am
investorinpa:
“gotta love those Democrats!”
You say that like this sort of behavior is exclusively in the domain of one party. Maybe if it was a homosexual encounter in some airport bathroom you would’ve been saying “gotta love those Republicans”?
Bush and Obama look like they will both be remembered as having incompetent presidencies. Not because of them particularly, but due more to the people they surrounded themselves with (or got surrounded by). That boils down to lobbyists and corporations… (that control the media and help divide us into these two partisan camps that play off each other while constantly dancing in the same direction).
1. Ban lobbying. It is legalized bribery.
2. No corporate campaign contributions.
3. Do away with the law that allows corporations to have all the rights of a living human citizen. In a way, corporations are a Golem we created that we are now at the mercy of. Which is why none of these 3 things has any chance of happening without another revolution.
January 7th, 2010 at 11:56 am
… and who has said that Geithner “crossed out” any lines in the public disclosures? Nobody.
And these funds the Fed managed, how are they doing? Oh they’re profitable.
And who can’t stand the idea of the gov’t having a success? Who is “they?” Why your favorite inflammatory, attention-starved Congressman Darrell Issa… remember the one who accused the entire Bush administration and the Fed of a “cover-up” in B of A with no facts?
http://www.reuters.com/article/idUSTRE55N4KL20090624
…and was laughed off prime time? Darell Issa, who’s trying to look for anything in the extraordinary measures taken to save the America economy to further his TV time. Looking for more non-issues.
…oh.. and those extraordinary measures, they worked.
January 7th, 2010 at 12:12 pm
“and loaded up on incompetent retreads”
Your spelling it wrong…
January 7th, 2010 at 12:51 pm
Have we all forgotten “What’s good for General Motors (substitute any Corp) is good for the
USA. LOL
January 7th, 2010 at 1:44 pm
Did Stephen Friedman tell Mr. Geithner to keep quiet while Mr. Friedman bought GS shares?
January 7th, 2010 at 2:34 pm
VennData, your credibility would be helped if you were so kind to disclose as to which branch of the Fed/Treasury complex you work for.
‘who has said that Geithner “crossed out” any lines in the public disclosures?’
The second paragraph of the Bloomberg article above says as much, although obviously we don’t know which NYFed staffer was holding the Sharpie marker.
“And these funds the Fed managed, how are they doing? Oh they’re profitable.”
Please back up your assertion with actual data. I look at the current status of e.g. Maiden Lane LLC (the Bear Stearns portfolio), which have already taken a significant haircut before any attempt to mark-to-market. Without a reflation of the late, great housing and credit bubble to 2005-2006 levels there is not a chance in hell the government recovers more than 60-70 cents on the dollar (factoring in any inflation resulting from Banana-Republic Ben continuing to run the Ponzi printing presses at full speed) on any of this crap when all is all is said and done. Oh yeah, and that will be on top of the $10B-plus they gave away right off the bat by paying off the main CDS counterparties at par.
But keep shilling away … I suspect you’re paid quite well for it.
January 7th, 2010 at 5:21 pm
I am amazed — after 16 months of Bush-Obama— that you can feel any outrage whatsoever. Personally I am numb.