Testy Conflict With Goldman Helped Push A.I.G. to Edge

[midnight]

Source: The New York Times

With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

The S.E.C. wants to know whether any of the demands improperly distressed the mortgage market, according to people briefed on the matter who requested anonymity because the inquiry was intended to be confidential.

In just the year before the A.I.G. bailout, Goldman collected more than $7 billion from A.I.G. And Goldman received billions more after the rescue. Though other banks also benefited, Goldman received more taxpayer money, $12.9 billion, than any other firm.

In addition, according to two people with knowledge of the positions, a portion of the $11 billion in taxpayer money that went to Société Générale, a French bank that traded with A.I.G., was subsequently transferred to Goldman under a deal the two banks had struck.

Read more: http://www.nytimes.com/2010/02/07/business/07goldman.html?emc=eta1

---

Mr. Egol, Goldman trader, structured a group of deals called "ABACUS" that could benefit Goldman from housing collapse. Mr. Egol and Goldman believed AIG would have to make large payments if the housing market ran aground. It did, and they made a killing.

[TacticalPeek]

1. Testy conflicts with giant vampire squid will do that every time.

Or so some people say.

[Frank Booth]

2. The more information that comes out,

the more obvious it becomes that Goldman helped to engineer the financial crisis. It was corporate treason. Goldman should be broken up and those individuals directly responsible for the unlawful behavior should be prosecuted.

[UpInArms]

12. well, since the USSC ruled that Goldman is a "person," I think the

death penality would be fitting.

[No Elephants]

3. Thank heaven for the new laws and regulations that will curb abuses like this and fix the "too big

to fail" problem, so we will never have the need for another taxpayer bailout of these shameful, shameless theives. We learned of the collapse in the fall of 2008, but our stellar Congress acted quickly.


:sarcasm:



http://www.thenation.com/doc/20090518/scheer

http://topics.wsj.com/person/g/timothy-f-geithner/624

http://motherjones.com/politics/2010/01/henhouse-meet-fox-wall-street-washington-obama




Why Americans remain continually docile is beyond me.

[Amonester]

4. Yep. All GS executives should be forced to pay back.....

the National Debt with their bonuses.

If they refuse, ( ) 'em.

That would make an example.

[midnight]

5. Nice chart of who are the favorite law makers to Big Finance...

LEGISLATOR

DONATIONS FROM
BIG FINANCE, 2009

WHY WALL STREET WANTS
HIS/HER ATTENTION

Sen. Charles Schumer (D-N.Y.)

$1,735,900

The Street's favorite Dem fought regs for derivatives, credit ratings, and accounting

Sen. Harry Reid (D-Nev.)

$1,019,110

As majority leader, signed off on TARP; all finance-related bills need his approval

Sen. Kirsten Gillibrand (D-N.Y.)

$944,950

Junior senator voted against the bailout twice—perhaps she'll come around

Sen. Chris Dodd (D-Conn.)

$745,698

Once a deregulation fan, he's now facing a reeelction fight—and pushing for reforms

Rep. Eric Cantor (R-Va.)

$499,197

Minority whip's October '09 (!) op-ed said Americans underappreciate derivatives

Sen. Michael Bennet (D-Colo.)

$458,008

Used to retool bankrupt companies for conservative billionaire Philip Anschutz

Rep. Jim Himes (D-Conn.)

$423,873

Ex-VP at Goldman Sachs, member of pro-business New Democrat Coalition

Sen. Blanche Lincoln (D-Ark.)

$409,300

As ag committee chair, she must sign off on any new derivative regulations

Rep. Barney Frank (D-Mass.)

$382,349

Financial Services Committee chair has called for "death panels" for failing firms

Rep. Melissa Bean (D-Ill.)

$364,875

Tried to weaken consumer protection bill, voted against taxing giant AIG bonuses

Source: Center for Responsive Politics (donations as of 10/25/09)

[midnight]

6. Tim Geithner says we still need global bank reform...

Treasury Secretary Timothy F. Geithner said Saturday that the recovery in the global economy has not caused major economies to ease up on their commitment to stiffen the rules for banks.

"We all share a deep commitment to try to move forward and reach agreement on a strong, comprehensive set of financial reforms on the timetable we all committed to last September," he said at a news conference after a meeting of Group of Seven finance chiefs in Iqaluit, Canada.

"That means agreement on . . . a new set of capital requirements for large global institutions by the end of this year," he added, playing down the possibility that the United States might be headed in a different direction from the G-7.

Some G-7 members have expressed reservations about the U.S. proposals, but Geithner deflected any suggestion this was a hindrance for reform.

"We all have somewhat different systems and these common standards we put in place are going to have to be complemented by slightly different approaches at the national level," he said. "But what you saw today was . . . a strong commitment together . . . to put reforms in place."http://www.washingtonpost.com/wp-dyn/content/article/2010/02/06/AR2010020602297.html?wprss=rss_politics

I wish I could say Tim Geithner had someone else's concerns in mind other than Goldman's, but his moves with AIG show that he is their no. one lobbiest...

[midnight]

7. Some say second mortgages should be written down to zero....

As for housing prices, Mr. Rosenberg expects further declines of 10 to 15 percent over the next few years. He pointed to the roughly nine million residential housing units available for sale across the country, a very high vacancy rate when judged against a total housing stock of 130 million units.

If his forecast is accurate, the numbers of borrowers who owe more than their homes are worth will rise significantly. Mr. Rosenberg estimates that fully half of the mortgage-holding population in the country could be underwater by 2011.

For now, these borrowers are getting little to no help from lenders — no surprise — or from the government. Indeed, the Obama administration’s loan modification program has more or less allowed banks that own second mortgages on troubled borrowers’ homes to continue to press for full repayment of these obligations.

When it comes to writing down principal amounts on mortgages, the government has pressured those holding the first mortgages more than the institutions holding the seconds. Never mind that the second liens are worthless and should be written down to zero.http://www.nytimes.com/2010/02/07/business/economy/07gret.html

[kpete]

8. Testy Conflict With Goldman Helped Push A.I.G. to Edge

Source: New York Times

Testy Conflict With Goldman Helped Push A.I.G. to Edge

By GRETCHEN MORGENSON and LOUISE STORY
Published: February 6, 2010

Billions of dollars were at stake when 21 executives of Goldman Sachs and the American International Group convened a conference call on Jan. 28, 2008, to try to resolve a rancorous dispute that had been escalating for months.
A.I.G. had long insured complex mortgage securities owned by Goldman and other firms against possible defaults. With the housing crisis deepening, A.I.G., once the world’s biggest insurer, had already paid Goldman $2 billion to cover losses the bank said it might suffer.

A.I.G. executives wanted some of its money back, insisting that Goldman — like a homeowner overestimating the damages in a storm to get a bigger insurance payment — had inflated the potential losses. Goldman countered that it was owed even more, while also resisting consulting with third parties to help estimate a value for the securities.

After more than an hour of debate, the two sides on the call signed off with nothing settled, according to internal A.I.G. documents and an audio recording reviewed by The New York Times.

Read more: http://www.nytimes.com/2010/02/07/business/07goldman.html?hp

[midnight]

9. "The S.E.C. wants to know whether any of the demands improperly distressed the mortgage market

, according to people briefed on the matter who requested anonymity because the inquiry was intended to be confidential." This quote is from this New York Times story, and it's telling about how disruptive this business as usual was created....

[Octafish]

10. AIG was like Goldman's very own hedge fund.

And now that the taxpayers are there to insure the insurance, what's not to love?

[Capt. Jack]

11. We must stop them!

We all seem to forget the word “mortgage” derived from French means (“mort” = “death” and “gage” = “gamble”).

Death Gamble.

Usually the borrower dies first and the lender wins the gamble. Once in a while the lenders die en-masse, which without taxpayer support, would be the case here and now. If it’s they who are proved to have committed fraud via bogus Credit Default Swaps, outcome-based appraisals, Yield Spread Premiums, exotic mortgage backed securities, etc….I say let them die.

Join our group of VOLUNTEERS to stop this MADNESS. Until we do - America's Financial Sclerosis will continue to worsen.

http://www.foreclosurehamlet.org

http://www.4closurefraud.org