Are AIG's Counterparties Being Protected Because They're Foreign? (AIG)

Business Insider ^ | 05 Mar 2009 | Joe Weisenthal

[BGHater]

Even AIG has admitted that its neverending bailout isn't a bailout of itself, but a bailout if its counterparties. AIG (AIG) is just a "conduit" admitted CEO Ed Liddy.

But the government refuses to say who those counterparties are, ridiculously claiming that those CDS buyers entered into legitimate transactions with expectations of privacy.

But that's rubbish. Those banks are getting bailouts, just like all the TARP recipients are, and if they didn't want the bailout money they could voluntarily rip up those credit default swaps.

Why isn't the government telling us who they are? Probably because they're afraid over the reaction when people learn they're in large part European.

Your tax dollars are going into European banks. Of course, systemic risk is systemic risk. Were those banks to collapse, it could be just as damaging as when American banks collapse. But pollitically it'll go over way worse.

That's the best theory we can come up with. Any others?

[Centurion2000]

Interesting theory. My own suspicions revolve around AIG’s significant control of assets belonging to American union pension funds.

Don't forget they control Congressional pensions as well.

[ding_dong_daddy_from_dumas]

If we had responsible congresscritters, they would demand that AIG (and others) disclose where every penny of the TARP and FED funds are going. If Bernanke refused, they would amend the Federal Reserve law.

[ga medic]

I called them guarantees instead of Swaps. The point is still the same. The issued insurance against loss on many mortgage backed securities, and didn’t have the capital to pay up. Many of the mortgage backed securities were sub-prime, and defaulted and AIG can’t pay. There were many, many banks that held subprime backed mortgage securities and AIG credit default swaps, that will go under if the bailout of AIG doesn’t continue.