March 12 , 2009
Bailing Out America's Most Corrupt Capitalists
Bottom Feeders at the Trough
By SHARON SMITH
The federal bailout of insurance giant American International Group (AIG) swelled to $170 billion in early March after a third infusion of taxpayer dollars. Yet even as the final details were being ironed out on February 28th, AIG filed a lawsuit against the government, claiming the IRS owes it $306 million in previous overpayments on taxes, interest and penalties. "AIG is taking this action to ensure that it is not required to pay more than its fair share of taxes," a company spokeswoman explained to the Wall Street Journal without a hint of irony.
AIG’s stunning lack of gratitude toward its rescuers demonstrates the degree to which greed still pays on Wall Street. AIG executives, of course, emerged as the unwitting personification of unbridled corporate opulence after the company’s first two federal bailouts in September and October, when AIG hosted a $440,000 luxury spa vacation in California and then flew another group of executives to England for an $86,000 partridge hunt. AIG’s chief executive officer, Edward Liddy, finally agreed to cancel more than 160 subsequent executive entertainment events with a price tag of more than $8 million -- leaving observers to wonder when these corporate parasites bothered to even show up at the office.
The Federal Reserve has engaged in much hand wringing over AIG’s responsibility for its own demise. Federal Reserve Chairman Ben Bernanke minced no words, arguing, “AIG exploited a huge gap in the regulatory system… This was a hedge fund basically that was attached to a large and stable insurance company.” AIG particularly favored providing guarantees for collateral debt obligations (CDOs), or bonds backed by debts -- including subprime mortgages. But when Federal Reserve Vice Chairman Donald Kohn appeared before the Senate Banking Committee on March 5th, he refused to disclose the names of AIG’s top corporate trading partners, who have been among the biggest beneficiaries of the AIG federal bailout, arguing, "I would be very concerned that if we started giving out the names of counterparties here, people would not want to do business with AIG.”
The Wall Street Journal has discovered the names of some of the recipients of AIG bailout money. The cast of characters is familiar, mainly large U.S. and European banks that were AIG’s top traders, which have together received roughly $50 billion in taxpayer money since September. The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their CDOs, although market value was only 47 cents on the dollar, according to the Financial Times. For these Wall Street insiders, AIG’s bailout proved to be a cash cow.
Please read the complete article at:
http://www.counterpunch.org/sharon03122009.html
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
