Posted on 11/24/2009 4:54:08 PM PST by Brugmansian
As we have been reading the latest coverage on the AIG bailout from the SIGTARP report and the Treasury Secretary Geithner’s Congressional testimony, a nagging question remains unresolved: why did AIG get bailed out but the monoline bond insurers did not? . . .
I hate to get sucked into the vampire squid line of thinking about Goldman, but the only explanation i can think of for why AIG got rescued and the monolines did not is because Goldman had significant exposure to AIG and did not have exposure to the monolines.
When it became clear that AIG could face bankruptcy, Goldman’s plan to profit by shorting ABS CDOs was threatened . . . This was a real crisis for Goldman – they thought they had outsmarted the subprime market with their ABS CDOs and outsmarted all of the other banks by getting collateral posting from AIG when they got downgraded. But if AIG went away, this strategy would have blown up and cost Goldman billions.
All of this is essentially factual and based, for the most part, on public information.
As a matter of speculation, i believe that Goldman and their helpers deliberately pumped up the media with the threats that the subprime market posed in order to hasten the collapse of the subprime market. this allowed them to realize their gains sooner from shorting ABS CDOs – they had become impatient waiting for it to blow up.
In addition, I believe that Goldman and their helpers – including their many connections with the White House and the Fed – pumped up concerns about the systemic risk that the market was facing from a Lehman and AIG failure, so that they could force the government to step in and bail out AIG . . .
(Excerpt) Read more at nakedcapitalism.com ...
See post #20.
Except AIG didn't have nearly enough assets to pay the full cost of losing the bet. That's why Geithner had to bail out AIG so his friends at GS didn't get a haircut.
The real “Collateral” here is the IRS revolver...pointed at the heads of taxpayers....no matter how hard you try to dress it up otherwise.
Are you sure about that?
It is true that the collateral was less than the amount of the bet.
That's why Geithner had to bail out AIG so his friends at GS didn't get a haircut.
How did Geithner do that?
there is a new book on this coming out that was excerpted in Vanity Fair
interesting
yes...I know VF sux
but it does have a nice pic of Penelope Cruz’s arse on the front
But I agree. GS knew it had enough insiders in government to point that gun and fire. And now with Obama, it has more. GS was his largest corporate donor. Lloyd Blankfein is along with Jeff Immelt, the two favorite CEOs on the WH visitor list.
You're the guy who didn't know they had handed over billions in real collateral to Goldman. Why would I be kidding you?
AIG's financial crisis intensified Monday night when its credit rating was downgraded, forcing it to post $14.5 billion in collateral. The insurer has far more than that in assets that it could sell, but it could not get the cash quickly enough to satisfy the collateral demands.
Let me know if there is anything else I can help you with.
I give up with you. $85B is a lot bigger than $3B — the shortfall was huge.
Yes, they had a big cash shortfall.
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