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Exclusive: AIG Was Responsible For The Banks' January & February Profitability

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-30-09 06:37 AM
Original message
Exclusive: AIG Was Responsible For The Banks' January & February Profitability

Originally Posted by ozymandius in March 30 Stock Market Watch Thread:


"Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good.

I present the insider perspective of trader Lou (who wishes to remain anonymous) in its entirety:

"AIG-FP accumulated thousands of trades over the years, all essentially consisted of selling default protection. This was done via a number of structures with really only one criteria - rated at least AA- (if it fit these criteria all OK - as far as I could tell credit assessment was completely outsourced to the rating agencies).

Main products they took on were always levered credit risk, credit-linked notes (collateral and CDS both had to be at least AA-, no joint probability stuff) and AAA or super senior portfolio swaps. Portfolio swaps were either corporate synthetic CDO or asset backed, effectively sub-prime wraps (as per news stories regarding GS and DB).

....

During Jan/Feb AIG would call up and just ask for complete unwind prices from the credit desk in the relevant jurisdiction. These were not single deal unwinds as are typically more price transparent - these were whole portfolio unwinds. The size of these unwinds were enormous, the quotes I have heard were "we have never done as big or as profitable trades - ever".

...

For those to whom this is merely a lot of mumbo-jumbo, let me explain in layman's terms:


AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

....

What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary."

http://zerohedge.blogspot.com/2009/03/exclusive-aig-was...
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acmavm Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-30-09 06:42 AM
Response to Original message
1. Still gaming the system and scamming the American people I see
Edited on Mon Mar-30-09 06:45 AM by acmavm
<snip>

c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary."
<snip>

edit: To say that I'm sure glad that the American auto industry has to live up to strident standards set by these fucks. I mean, thank goodness they're 'servicing' Wall Street and making damn sure that Detroit toes the line. God damn pesky Americans thinking they have a right to jobs.

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Dinger Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-30-09 06:54 AM
Response to Original message
2. Dumb Question:
Did GM or Chrysler get money from AIG? Sorry, I'm not as informed as I should be on the bailout/stimulus package. Please excuse my ignorance, but I'd like to know if there is a connection between AIG and the auto industry.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-30-09 07:16 AM
Response to Reply #2
3. To My Knowledge, No
Reports on who got AIG funds lately focused on banks at home and abroad, and Goldman Sachs.

GM tried to become another "bank" with it's GMAC financing unit. That's what ate their lunch, dinner and onward into the next generation. They lost it all on mortgages and credit card defaults.

Chrysler's been a weak sister for decades, and already undergone one bailout (which they completely repaid, early).
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JDPriestly Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-30-09 09:06 AM
Response to Original message
4. The link did not work for me.
This theory is believable, but you don't rely on an acceptable source.
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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Mar-30-09 09:26 AM
Response to Reply #4
5. Me Either, But I did a Search on AIG in the Blog and It Popped right Up
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