There's a New AIG Story. I Was an AIG Exec. Here's the Deal.

[kpete]

There's a New AIG Story. I Was an AIG Exec. Here's the Deal.
by RJ Eskow
Mon Apr 19, 2010 at 08:56:33 PM PDT

It's looking like the SEC/Goldman Sachs lawsuit could open up a whole new can of worms, one that Tim Geithner and some bank executives aren't likely to be very happy about. The story's about AIG and I used to work there so, as much as I like to stay out of the story, a little personal background is in order. We'll do the story first and then get to the personal stuff. The dKos community may hammer me for having worked for AIG, but the fact is that I did.

................

Here's where it gets uncomfortable for Geithner and some executives. Remember all that criticism of the taxpayer-funded AIG bailout, and how under Tim Geithner's direction (he was running the New York Fed then) AIG paid 100 cents on the dollar to Goldman and other "counterparties" for its debts? It turns out that AIG insured seven Abacus deals, and the debts they were ordered to pay may have included payoffs on some of these deals. It turns out that AIG reportedly wanted to pay 60 cents on the dollar, but Geither's New York Fed directed them to pay the full amount.

AIG paid $13 billion from its bailout to Goldman at Geithner's direction. And now, as the Wall Street Journal reports, the SEC "is investigating whether other mortgage deals arranged by some of Wall Street's biggest firms may have crossed the line into misleading investors." And, while "It isn't known what deals the SEC is investigating," the Journal adds that "among the firms that created mortgage deals that soon went sour were Deutsche Bank AG, UBS AG and Merrill Lynch & Co., now owned by Bank of America Corp."

Who were some of the other counterparties paid by AIG under Geithner's direction? Deutsche Bank, UBS, Merrill Lynch, and Bank of America. This is already a big story, and it could get much bigger. None of those firms can be happy today, knowing that they're being drawn into the firestorm surrounding Goldman Sachs. And Geithner can't be happy that his handling of AIG is once again in the news. He took a beating for it back then (including from right-leaning Forbes, the self-described "capitalist tool"), andthe NY Fed's eventual defense of its own actions was ineffectual. Among other things, it claimed that the counterparties' "contractual rights were well-protected."

Not if they lied, they weren't. Nobody has a "well-protected right" to enforce contracts made under false pretenses. It looks now as if the New York Fed didn't try hard enough.

more:
http://www.dailykos.com/storyonly/2010/4/19/858925/-Theres-a-New-AIG-Story.-I-Was-an-AIG-Exec.-Heres-the-Deal.

[zipplewrath]

1. Time for Timmy to go

Whether he was a mistake up front can be an argument for the ages.

He's proven to be poor at the politics.

And now he, at the very least, can take the mistakes of the first year away with him, and the next guy can start with a clean slate.

[notesdev]

2. GS paid for the Treasury fair and square

They gave a million dollars to Obama, don't you think they deserve to get something out of it? Having their man run the Treasury is the least we can do to repay their boundless generosity.

[dixiegrrrrl]

3. Well, yeah..there is that.

I mean, fair's fair, right?

[zipplewrath]

4. They did

Toxic asset purchases, at 100% of face I might mention. I think they got their moneys worth.

[FourScore]

5. k/r

[FourScore]

6. dupe. please delete.

Story here:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x8181398

[cbdo2007]

7. This not only implicates Geithner but also Paulson - correct?

If Geithner was telling AIG to use the Govt. money to "overpay" for this sh*t from Goldman Sachs, they were essentially funneling money from Paulson to GS and he used to work there. Hmmmmmm, we may actually see some heads roll from this after all...not to mention that this happened under the Bush Admin.

[notesdev]

8. Yup

While Timmy was running cover, Paulson was running GS.

[emsimon33]

9. k&r