He Did What!?!

Timothy Geithner did what was he was President of Federal Reserve Bank of New York? Well according to this Bloomberg report the NY Fed, led by Mr. 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.

Make sure you are sitting down when you read this story and if you have high blood pressure that you take your medicine before reading it.

Wall Street Journal Outlines Goldman Sachs Glorified Ponzi Scheme with AIG

The Wall Street Journal has an investigative piece outlining how Goldman Sachs Fueled AIG Gambles. It appears Goldman Sachs acted as a middleman for even more CDSes from other banks.

Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom. That is roughly twice as much as Société Générale and Merrill Lynch, the banks with the biggest exposure to AIG after Goldman.

In Goldman's biggest deal, it acted as a middleman between AIG and banks, taking on the risk of as much as $14 billion of mortgage-related investments. Then Goldman insured that risk with one trading partner—AIG, according to the Journal's analysis and people familiar with the trades.

AIG II - Maurice Greenberg is Back

If we screw up and get fired that becomes part of our permanent employment record. But if you are part of the financial oligarchy, well, they can practically destroy the entire financial system and get multiple do-overs. Several examples come to mind:

1) John Meriweather - founder of Long-Term Capital Management who after practically destroying the financial system with his high flying computer models went on to start several other hedge funds. and

2) Maurice "Hank" Greenberg - founder and former Chairman and CEO of AIG.

Is'nt American Capitalism just grand?

Yeap. Maurice Greenberg is back and unfortunately he maybe benefiting from taxpayer's bailout of AIG:

AIG, a maze of state regulation

The New York Times has an interesting story, New Weakness Seen at A.I.G. . It seems AIG has been playing state regulators off of each other, to hide liabilities.

In the months since A.I.G. received its $182 billion rescue from the Treasury and the Federal Reserve, state insurance regulators have said repeatedly that its core insurance operations were sound — that the financial disaster was caused primarily by a small unit that dealt in exotic derivatives.

They're Back - AIG Executive Bonuses

They're back. Like some sort of Poltergeist, where executive compensation has no relationship whatsoever to job performance.


Bailed-out insurer AIG again found itself in the crosshairs of bonus rage on Friday over its plans to pay $2.4 million in executive bonuses next week.

But the larger issue is how AIG will deal with its obligation to pay roughly $235 million still owed to employees of its crippled financial products division.

Déjà vu? A very nasty ghost in the machine? How about diversion instead?

More Events Regarding Derivatives

The headlines buried how AIG has more massive potential losses on their CDS portfolios.


According to AIG, the risk factor includes a super senior CDS portfolio with a net notional amount of $192.6 billion of AIG Financial Products Corp. and AIG Trading Group Inc. and their respective subsidiaries, collectively known as AIGFP, as of March 31, 2009. The portfolio represented derivatives written for financial institutions, principally in Europe, for the purpose of providing regulatory capital relief rather than for arbitrage purposes. The fair value of the derivative liability for these CDS transactions was $393 million at March 31, 2009.

AIG to Reduce Debt - What?

The headlines are ablaze with N.Y. Fed to Trim AIG Debt, Receive $25 Billion Stake in Two Subsidiaries:

American International Group announced yesterday that it has reached a deal to reduce its debt to the Federal Reserve Bank of New York by $25 billion.

Under the agreement, AIG will split off AIA and Alico into separate company-owned entities called "special purpose vehicles," or SPVs. The New York Fed will receive preferred shares now valued at $25 billion -- $16 billion in AIA and $9 billion in Alico -- and in exchange will forgive an equal amount of AIG debt.

GAO to audit Federal Reserve's Role in AIG Bail Out - Thanks Congress!

You might remember this post:

Senator Chuck Grassley (R-IA) submitted an amendment (amending Section 714 of the United States Code) that would have given significant auditing authority to Comptroller General/Government Accountability Office (GAO) over the Board of Governors of the Federal Reserve System.

Which managed to slip past the lobbyists and God knows who else in the Helping Families Save Their Homes Act of 2009, which was just signed into law.

Now Bloomberg reports Fed’s Role in AIG May Be First Target of GAO Audit:

AIG reporting they finally won't need more taxpayer money

It's only taken about $200 Billion, give or take a few, but AIG is reporting they don't need anymore bail out money.

American International Group Inc., the insurer rescued four times by the U.S., may post first-quarter results this week that don’t trigger a new capital injection from the government, said three people familiar with the matter.

The insurer will report that results in the first three months of 2009 improved from the record $61.7 billion fourth- quarter loss that New York-based AIG posted in March, according to the people, who declined to be identified because the firm scheduled its earnings announcement for May 7.

CNN money has a bail out tracker on all of the money doled out, which may or may not be accurate.