Posted on 01/26/2010 4:45:12 AM PST by mikelike
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In tonight's Heard On The Street section, the WSJ notes:
As everybody knows, AIG got a huge government bailout in September 2008 to help make payments on derivatives contracts with banks, including Goldman. Yet in the previous month, Goldman approached AIG about "tearing up" its contracts, according to a November 2008 analysis by BlackRock, then an adviser to the New York Fed. So was Goldman prepared to offer AIG a haircut in the month before its rescue? A legitimate question, given that Goldman refused to accept such a cut when the New York Fed raised the idea after it bailed out AIG.
The implications of this discovery are huge as they essentially destroy all the arguments presented by the FRBNY about an inability to extract concession out of Goldman (which being the largest AIG CDO counterparty, was the critical negotiating factor). It also casts doubt on the veracity of any arguments presented in Congress by Goldman representatives discussing the potential to take a haircut on their AIG exposure. What this means in plain English is that, in the month before the Fed entered the scene, GOLDMAN SACHS ITSELF OFFERED TO TEAR DOWN THE CDS ON AIG'S CDO PORTFOLIO (we don't use caps lock lightly). This is basically a smoking gun on the moral hazard issue perpetrated by the FRBNY when it got involved, and indicates that through their involvement, Tim Geithner, Sarah Dahlgren or whoever, not only did not save US taxpayers' money, but in fact ended up costing money, when they funded the marginal difference between par (the make whole price given to all AIG counterparties after AIG was told to back off in its negotiations) and whatever discount would have been applicable to the contract tear down that had been proposed by Goldman a mere month earlier. This, more so than anything presented up to now, is the true scandal behind the New York Fed's involvement.
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Still think Bernanke should be reconfirmed? The time of accountability has come. Have we had enough of the Banksters already?
When are we going to finally begin decorating trees and lamp posts with these people?
Also, from Karl Denninger:
http://market-ticker.org/archives/1903-NUCLEAR-Did-Goldman-Offer-To-Tear-Up-AIG-CDS.html
As long as you start with Barney Frank then any time will do.
Ah, but the banksters have repaid the bailout money. So all is well.
No one does this for free. Tim Guithner did not give GS billions without being compensated. Guithner has lived in many places and grew up in Asia. Off shore somewhere GS transferred properties and gold bullion into foreign registered corporation under Timmy’s control. I have no proof but that’s how you pay off Timmy
Now Timmy would have a tough time bringing this loot into America but he can live outside America and enjoy this retirement slush fund
I wonder what Turbotax Timmy’s payola was? Millions, at least.
Million? You are so modest. To these finance honchos, million is like a penny.
Was the taxpayer money laundered through AIG to GS (at par) the only taxpayer money to go to GS, or was there additional taxpayer money shoveled into GS?
Inneresting!
Plus Timmy’s father ran the Asian branch of the Ford Foundation with head quarters in Bangkok. His father gave 0bama’s mother Ford Foundation grant money and met w her a few times (so I have read)
Little Timmy’s a well-connected rascal, that’s for sure.
The bailout wasn’t for AIG. They were just the funnel to get the money to Goldman.
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The usual graft in Thai politics is 20% ... Timmy learned well no doubt.
Thanks for the links; posts. BTTT!
This is criminal collusion under the patina of regulation. But then again, considering that the Federal Reserve is a corporation whose sole shareholders are the member financial institutions, such as the banks, who own shares in proportion to their capital, the entire structure of the Fed is crony collusion that drags government in as a willing partner and beneficiary of the fiat money, perpetual inflate and borrow (redundant) scheme.
Thanks for the ping, those references.
Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion—when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed. - Ayn Rand
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