Posted on 09/15/2009 10:09:58 PM PDT by bruinbirdman
The financial system and economy are coming back to life. So who's going to pay TARP back and who isn't?
As the first anniversary of the government's $700 billion Troubled Asset Relief Program approaches, Treasury Secretary Timothy Geithner has a lot to be happy about.
Thursday, facing the congressional panel charged with overseeing the TARP funds, Geithner reminded them that when he took office, the Treasury had given $240 billion to banks. Since then, $70 billion has come back as the healthiest banks have begun to repay taxpayers. He estimates banks will repay another $50 billion over the next 12 to 18 months.
But what of the large institutions that have not yet repaid the government and have enormous debts? That's where the panel--no surprise--focused its questions for Geithner.
At the top of the list is AIG (AIG). The insurer would have gone bankrupt if not for the string of bailouts it received from the Treasury and Federal Reserve. (AIG owes $86.8 billion to the government)
Elizabeth Warren, the panel's chair, pressed Geithner for details of the AIG bailout. Much of it was used to pay obligations to the counterparties of its complex derivatives. Thanks to the bailout, these counterparties received payments on their contracts of 100%, essentially a backdoor bailout. If AIG had gone bankrupt, these payouts would have been lessened.
Geithner responded that another reason AIG's failure had to be stopped was because of the potential for disruption to all the people with AIG life insurance policies. The Treasury has yet to offer a detailed explanation for why AIG's counterparties needed to be paid in full.
Of the big banks, the government put $45 billion into Citigroup (C) and set up a guarantee of $5 billion on some of the banks troubled assets. Bank of America (BAC) has
(Excerpt) Read more at forbes.com ...
Geithner is a liar. AIG’s life insurance polocies were never at risk ever.
States wall off insurance companies and are required to keep excess reserves no matter what. States actually do a good job here.
AIG’s parent holding company tried to get it’s MANY subsidary insurance companies (life, acident,fire, annuity,etc.) to send funds upstream to the parent holding company.
The subsidaries said no and the state insurance commissioners said no. The insurance companies were walled off. State insurance regulation worked as designed.
Geithner either is ignorant or is lying.
He’s a racist...plain and simple.
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