Tag Archives: AIG

William Black: “Fire Holder, Fire Geithner, Fire Bernanke”

26 Tuesday Oct 2010

Posted by in AIG, bailout, Financial Crisis, Foreclosures, Justice Department, Obama administration, too big to fail, Wall Street

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Lisa Epstein and William Black on Dylan Ratigan’s show yesterday:

Speaking of Geithner telling “one lie after another”:

“The United States Treasury concealed $40 billion in likely taxpayer losses on the bailout of the American International Group earlier this month, when it abandoned its usual method for valuing investments, according to a report by the special inspector general for the Troubled Asset Relief Program.

“In our view, this is a significant failure in their transparency,” said Neil M. Barofsky, the inspector general, in an interview on Monday.”

Zero Hedge has more of Mr. Barofsky’s report:

“This conduct has left the Treasury vulnerable to charges it has manipulated its methodology for calculating losses to present two different numbers depending on its audience: one designed for release in early October as part of a multifaceted publicity campaign touting the positive aspects of TARP and emphasizing the reduction in anticipated losses, and one, audited by the GAO for release in November as part of a larger audited financial statement. Here again, Treasury’s unfortunate insensitivity to the values of transparency has led it to engage in conduct that risks further damaging public trust in the Government.”

‘Manipulated its methodology for calculating losses?” Didn’t Jeff Skilling and Andy Fastow go to prison for that?

“Risks further damaging public trust in the Government?” Is that even possible?

TARP Inspector General Could Have Geithner In His Sights

29 Thursday Apr 2010

Posted by in AIG, bailout, economy, Financial Crisis, Goldman Sachs, Politics, too big to fail, Wall Street

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Timmy might have bigger problems than his inability to use Turbo Tax. Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, is looking into filing charges in the New York Fed’s handling of the AIG–Goldman Sachs monkey business. From Bloomberg:

“The TARP watchdog has…criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc. was saved from insolvency in 2008, when Geithner was head of the Federal Reserve Bank of New York.

The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges.

In Senate Finance Committee testimony on April 20, Barofsky said SIGTARP would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group Inc. that is at the center of a U.S. Securities and Exchange Commission lawsuit filed against the investment bank on April 16. “

All I want for Christmas (or Memorial Day, or the 4th of July, or Labor Day, or…) is a REAL Treasury Secretary, not a Wall Street lackey who is susceptible to whiplash every time Jamie Dimon or Lloyd Blankfein make a sudden move. Barofsky, make my wish come true.

Who Says Crime Doesn’t Pay?

12 Monday Apr 2010

Posted by in AIG, bailout, economy, Financial Crisis, financial reform, financial regulation, Politics, too big to fail, Wall Street

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Who says crime doesn’t pay? If you happen to be a bankster or the crook who caused the collapse at AIG which, but for $182 billion courtesy of that never-ending ATM known as the American taxpayer, nearly led to the meltdown of our entire financial system, it pays like a Las Vegas slot machine. Consider the cases of Charles Prince, former Citigroup CEO, and Joseph Cassano, former head of AIG’s Financial Products Unit.

At last week’s Financial Crisis Inquiry Commission hearings Prince expressed his regret:

“I’m sorry that the financial crisis has had such a devastating impact on our country. I’m sorry for the millions of people, average Americans, who have lost their homes. And I’m sorry that our management team, starting with me, like so many others, could not see the unprecedented market collapse that lay before us.”

But not sorry enough to give back any of his ill-gotten gain from 2007 (emphasis added) :

“Prince, arguably the person most responsible for Citigroup’s enormous problems, can expect at least a $12.5 million cash bonus, compared with last year’s cash payout of $13.8 million.

And as he awaits his official retirement next month, Prince can rest assured that he will leave with $68 million, including his salary and accumulated stockholdings; a $1.7 million pension; an office, car and driver for up to five years — all in addition to the bonus. That is on top of $53.1 million he has taken home in the last four years, a period when $64 billion in the company’s market value has evaporated.”

However, Mr. Prince is a pauper compared to the HCIC (head crook in charge) at AIG, Joseph Cassano:

“Joseph Cassano was the head of AIG’s Financial Products Unit. They are the ones that made about a trillion dollars worth of bets in credit default swaps. They lost.

So, what happened to Cassano? This was all his idea and his team that brought on this colossal collapse. Well, he was fired! Great, justice served…Oh, did I forget to mention one thing? He received $35 million in bonuses when he was let go.”

…When they lost the bets, their company was devastated. Completely and utterly bankrput. The failure was so large, it promised to drag down the rest of the global economy with it. This forced the government to step in and cover their losses. So far, the United States taxpayers have put in $182 billion to keep AIG afloat.

That 35 mil was only tip money for Cassano:

“How much did he make for himself from 2000 to 2008 by gambling with the company’s money? Only $280 million…In the end, he walked away with over $315 million for destroying the company and maybe the whole economy.”

All that and no accountability required:

“This week the Wall Street Journal reported that prosecutors will likely not charge him with fraud. They are not going to try for clawbacks to get some of the money back. In the end, he gets away scott-free. But it’s better than free, he gets to keep all the money he never really made in the first place…”

The best way to rob a bank is to become a banker.

White Collar Contracts MUST Be Honored—Blue Collar Contracts? Toss ‘Em

23 Tuesday Feb 2010

Posted by in AIG, economy, Goldman Sachs, Wall Street

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The bonuses at AIG keep on coming:

“… AIG, the fallen insurer, paid out an additional $100 million this month, much of it to the very financial products division whose rampant risk-taking took the firm to the brink. And there’s another $75 million coming…[Treasury Secretary Tim] Geithner, and pay czar Kenneth Feinberg, say that while lamentable, the AIG payments must legally be honored.”

But yet last May during the General Motors–United Auto Workers negotiations, which the government insisted be a part of a GM bailout:

“People familiar with the UAW agreement said it largely mirrors concessions the UAW granted Chrysler LLC last month, including a suspension of cost-of-living allowances, bonuses and some holidays.

…The deal is the latest concession by the UAW after several years of cutbacks. Unlike past negotiations, which often dragged on for months and went past deadlines, the parties — under pressure from the Treasury, which has lent GM $15.4 billion — moved quickly to revise a contract approved in 2007.”

Compare that $15.4 billion for GM, which came with “pressure from the Treasury” to re-negotiate existing contracts, with the $182 billion given to AIG, no strings attached, and contracts that must be “legally honored.”

Sure sounds like a double-standard to me. White collar contracts? Sacred. Blue collar contracts? Toss ‘em in the garbage. But then again, Geithner wasn’t laundering money through GM to pay off his buds at Goldman Sachs, like he did through AIG (allegedly).

Another Round of AIG Bonuses

03 Wednesday Feb 2010

Posted by in economy, Financial Crisis, Politics, Uncategorized

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Under the word “chutzpah” in the dictionary, it should say “also see AIG.”

“American International Group plans Wednesday to pay another round of employee bonuses, worth about $100 million, said several people familiar with the matter, a year after similar payments at the bailed-out insurance giant infuriated many Americans and inflamed Washington.”

Yes, Washington was “inflamed.” And they did what? Bluster, as usual.

“This week’s retention payments go to those employees at the company’s Financial Products division who agreed recently to accept 10 to 20 percent less money than AIG had initially promised them two years ago.”

How very generous of them. Especially taking into account that the Financial Products division is the “unit which traded in the derivatives that imploded in September 2008, leading to the biggest government bailout in history.” That would be the implosion that left the taxpayers on the hook for over $180 billion. These are the people AIG needs to retain? They don’t need to be re-tained, in fact some of them should be de-tained. Like in the crossbar hotel.

It gets better:

“The agreement calls for employees who still work for the financial products unit to accept 10 percent cutbacks, while employees who have left the company must take 20 percent cuts…But some people have not agreed to the cutbacks and are insisting on the entire amounts. People with knowledge of the negotiations said that a vast majority of those still employed at A.I.G. had accepted the cuts, but only about a third of the former employees had done so.”

Some are even going to court:

“Andrew Goodstadt, a New York lawyer who represents more than a dozen current and former Financial Products employees, said he hoped the deal would be a step toward normalcy. “My clients are looking forward to getting paid their contractual entitlements,” he said, “and resolving this matter once and for all.”

Yes Mr. Goodstadt, your honorable clients who just want AIG to make good on its agreement with them. How about what they agreed to do after the last round of obscene  bonuses hit the fan:

“At the height of the controversy last spring, employees at the firm signaled they would return a total of $45 million by the end of 2009. A government audit in the fall showed that only about $19 million was returned.”

So by my calculations counselor, your clients still owe us $26 million. Cash only please, no checks.

Who’s In Charge Here, Washington or Wall Street?

06 Monday Apr 2009

Posted by in Politics

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There are both encouraging and discouraging signs today in the battle over who’s in charge, Wall Street or Washington. First the good news. Finally, somebody in D.C. gets it.

“Elizabeth Warren, chief watchdog of America’s $700 billion bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration’s approach to saving the financial system from collapse.

She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173 billion in bailout money, and banking giant Citigroup, which has had $45 billion in funds and more than $316 billion of loan guarantees.”

With one simple sentence Warren summed up what, in my opinion, should be the consensus among those in the Obama administration.

“The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous.”

That’s the good news, now for the bad. There are some “administration officials”( I smell Larry Summers) who are busy looking for loopholes in congressional restrictions placed on financial institutions who receive bailout money.

“The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefitting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.”

“Persuading”, aka bribing.

“The administration believes it can sidestep the rules because, in many cases, it has decided not to provide federal aid directly to financial companies, the sources said. Instead, the government has set up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.”

“Special entities” acting as “middlemen”, aka money launderers.

Speaking of limiting executive pay, Rep. Alan Grayson’s Pay for Performance Act, which does exactly that, passed the House 247-171, with 10 Republicans voting yes.

But there’s rain on that parade, too. Rep. Melissa Bean of Illinois, one of the so-called Blue Dog Democrats, sponsored an amendment which would “allow institutions that enter into a payment schedule with Treasury on terms set by Treasury to no longer be subject to the bonus and compensation restrictions created by the Act.“

It passed 228-198 with the support of 63 Democrats, most of whom also voted for Grayson’s bill. Go figure.