Author Topic: AIG: Private Federal Reserve using outrage to overturn the constitution!  (Read 52166 times)

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Offline Dig

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Full Title (We need the full text!)
http://www.govtrack.us/congress/bill.xpd?bill=h111-1577
H.R.1577

To require the Secretary of the Treasury to pursue every legal means to stay or recoup certain incentive bonus payments and retention payments made by American International Group, Inc. to its executives and employees, and to require the Secretary's approval of such payments by any financial institution who receives.


The text of this legislation is not yet available on GovTrack. It may not have been made available by the Government Printing Office yet.



TO FIX THE PROBLEM OF PASSING THE STIMULUS BILL WITHOUT READING IT, THEY JUST NOW PASSED ANOTHER BILL WITHOUT READING IT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Dig

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Pence co-sponsors AIG bonus payment bill
Representative cites outrage over situation
http://www.pal-item.com/article/20090319/NEWS01/903190311
PALLADIUM-ITEM • March 19, 2009


U.S. Congressman Mike Pence announced Wednesday that he has signed on as a co-sponsor to the "AIG Bonus Payment" bill, which would direct the treasury secretary to implement a plan within the next two weeks to recoup or stop the payment of AIG bonuses.


"There is an enormous amount of national outrage over A.I.G. executive bonuses, and I agree with it," said Pence, a Columbus Republican who represents Wayne County. "I am confident that we will recover these taxpayer dollars. But I also hope that a larger lesson will be made clear: bailing out every failing and irresponsible business in America will not put our nation on the path to a growing economy."

The AIG Bonus Payment bill (H.R. 1577), introduced Wednesday by Reps. Erik Paulsen and Leonard Lance, would direct the treasury secretary to implement a plan within the next two weeks to recoup or stay the payment of AIG bonuses.

The bill would require approval by the Treasury for any future bonus payments, of any kind, made by TARP fund recipients. It requires any future contractual obligations entered into by TARP fund recipients to make bonus payments of any kind to be approved in advance by Treasury.

A total of $165 million was awarded this week to 73 AIG employees as retention bonuses primarily for the AIG financial products division. Eleven of these employees are no longer with AIG.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline stymo1

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The Real AIG Scandal It's not the bonuses. It's that AIG's counterparties are getting paid back in full.

http://www.slate.com/id/2213942/

By Eliot Spitzer
Posted Tuesday, March 17, 2009, at 10:41 AM ET

Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?


For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold.

 And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG's counterparties are justified with an appeal to the sanctity of contract. If AIG's contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.
Quantcast

But wait a moment, aren't we in the midst of reopening contracts all over the place to share the burden of this crisis? From raising taxes—income taxes to sales taxes—to properly reopening labor contracts, we are all being asked to pitch in and carry our share of the burden. Workers around the country are being asked to take pay cuts and accept shorter work weeks so that colleagues won't be laid off. Why can't Wall Street royalty shoulder some of the burden? Why did Goldman have to get back 100 cents on the dollar? Didn't we already give Goldman a $25 billion capital infusion, and aren't they sitting on more than $100 billion in cash? Haven't we been told recently that they are beginning to come back to fiscal stability? If that is so, couldn't they have accepted a discount, and couldn't they have agreed to certain conditions before the AIG dollars—that is, our dollars—flowed?

The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation.

So here are several questions that should be answered, in public, under oath, to clear the air:

    What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

    Was it already known who the counterparties were and what the exposure was for each of the counterparties?

    What did Goldman, and all the other counterparties, know about AIG's financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn't they bear a percentage of the risk of failure of their own counterparty?

    What is the deeper relationship between Goldman and AIG? Didn't they almost merge a few years ago but did not because Goldman couldn't get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG's business model was not to pay on insurance it had issued.

    Why weren't the counterparties immediately and fully disclosed?

Failure to answer these questions will feed the populist rage that is metastasizing very quickly. And it will raise basic questions about the competence of those who are supposedly guiding this economic policy.
" It's called the American Dream because you have to be asleep to believe it." -- George Carlin

http://www.youtube.com/watch?v=acLW1vFO-2Q

Offline Dig

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They pre-emptively took out Eliot Spitzer because they knew he would have exposed the shit out of this on a grander scale!

I hope he starts really digging into "Who Killed John O'Neil"


BTW - Here are the facts regarding these f**king bonuses:

1] Federal Reserve gave AIG $90 Billion before any Bailout.

2] Bailout gave AIG another $50-100 Billion

3] Federal Reserve gave AIG additional tens of $billions to reach $270 Billion in taxpayer debt

4] Prior to presenting the stimulus bill, Chris Dodd's Amendment was revised to specifically not include these $265 Million. For perspective, $265 Million is over 1,000x less amount of money than the bailouts so far.  That is like giving someone $10.00 and then punching him in the face for how he spent one penny.

5] Chris Dodd has blamed Obama's administration (specifically the treasury and more specifically the confessed tax swindler Geitner) for doing a last second revision prior to the vote. Also it is important to recall that Obama promised bills would be posted on the internet 5 days prior to being voted on.

6] Another Democratic Senator has also expressed that the Obama cabinet has also blocked his attempt to clarify in the bill the curbing of dpecific spending that could incite anger from his constitutients.

7] The president of AIG under oath in congressional testimony has exposed that all of the bonus decisions were made by the Private Federal Reserve who controlled all approvals of all spending at board meetings (which these bonuses were a huge part of).

The private federal reserve gave us the problem and now they are giving us the solution.  The solution according to the private federal reserve is to abolish the constitution.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Dig

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http://www.latimes.com/business/la-fi-aig-bailout19-2009mar19,0,2707699.story
From the Los Angeles Times
In AIG flap, it's not just about bonuses anymore
Scrutiny of bailout terms expands as critics question federal officials' longtime ties to aid recipients.
By Tom Hamburger and Janet Hook

March 19, 2009

Reporting from Washington — The firestorm over American International Group is spreading beyond executive bonuses, with lawmakers and policy experts now questioning virtually all aspects of the taxpayer-financed rescue package for the insurance giant.

Among other issues, critics are asking why AIG was allowed to use federal bailout money to repay $13 billion in debt obligations to Wall Street powerhouse Goldman Sachs, as well as debts to foreign banks.

Prominent Republicans, joined by some Democrats, suggested that the answer could be found in longtime ties linking Washington to Wall Street.

Former Treasury Secretary Henry M. Paulson was once chief executive of Goldman Sachs, for example, while AIG's chief executive, Edward M. Liddy, was a member of Goldman's board. The Treasury official who is in charge of the bailout, Neel Kashkari, is a former Goldman executive.

"Look at where the money went: Goldman Sachs, Paulson's firm, foreign banks," Sen. Jim Webb (D-Va.) said Wednesday. "AIG gave more money to foreign banks than we gave in loans to the auto industry."

"The real outrage over the AIG bailout isn't executive bonuses, it's that billions in taxpayer funds intended for AIG have been passed through to benefit foreign banks and Wall Street behemoths like Goldman Sachs," former House Speaker Newt Gingrich wrote in an e-mail letter to conservatives Wednesday morning.

Gingrich and Republicans on Capitol Hill unleashed their anger on the current Treasury Secretary, Timothy F. Geithner, saying he bore responsibility for being overly generous in providing aid to failed companies like AIG.

Two outspoken House Republicans -- Darrell Issa of California and Connie Mack of Florida -- called for Geithner's resignation, saying the AIG bonus controversy on top of existing doubts about the bailout made such a move necessary.

Other Republicans, including the ranking member of the Senate Banking Committee, Alabama's Richard C. Shelby, offered caustic criticism of Geithner but stopped short of calling for his resignation.

In his weekly e-mail, Gingrich accused Geithner of being disingenuous in saying he inherited the current mess.

"The truth is that Secretary Geithner didn't inherit the policy of throwing billions of taxpayer dollars at failing companies -- he helped create it," Gingrich wrote. "Even before he was Treasury secretary -- when he was still head of the New York Federal Reserve -- Geithner was so deeply involved in the government's bailout of Bear Stearns, its takeover of Fannie Mae and Freddie Mac, and its bailout of AIG."

Too connected?

Democrats, meanwhile, heaped the blame on decisions made during the Bush administration. With Geithner at his side Wednesday, before boarding his Marine One helicopter to start a trip to California, President Obama told reporters at the White House, "I have complete confidence in Tim Geithner and my entire economic team. . . . You know, he is making the right moves in terms of playing a bad hand."

Still, some critics on the left -- including organized labor officials and prominent House Democrats -- suggested that bailout decision-making to date had been sullied by a Wall Street bias afflicting both the current Treasury secretary and his predecessor.

"AIG was too well-connected to fail," said Rep. Brad Sherman (D-Sherman Oaks) during a contentious House hearing in which AIG's Liddy was grilled by lawmakers.

Goldman Sachs became the subject of controversy this week when AIG revealed that it had given the company $13 billion in taxpayer bailout money to repay its collateralized debt obligations.

Goldman spokesman Michael DuVally says that figure is too high and that the correct number is closer to $8 billion. He dismissed suggestions that Goldman played a role in designing the bailout terms, or its bonus provisions.

While Goldman is healthy and has said it does not need bailout funds, it did accept taxpayer-funded payments from AIG.

"The government made a policy decision to support AIG as a way to contain systemic risk," DuVally said. "We were entitled to additional collateral under the trading agreements that we had with AIG."

Since the bailout for AIG was authorized in September, the once-successful insurance giant has passed along about 30% of the $170 billion it received from taxpayers to Goldman, Deutsche Bank, Merrill Lynch and other entities, including municipalities.

One of the largest amounts -- $11 billion -- went to the Societe Generale Group, a Paris banking and financial services company. The funds paid to those firms were released to make whole the buyers of AIG credit insurance.

The decision to make the across-the-board payments at 100% of the original value has drawn criticism since Sunday, when AIG reluctantly released the list of companies that had received taxpayer aid.

One prominent economist said he thought the Wall Street pedigree of decision makers in the Bush and Obama administration had hampered their judgment.

"They were far too sympathetic to the needs of the bankers and in the process have not accomplished the cleanup that needed to be effected," said Peter Morici, an economist at the University of Maryland who is an outspoken critic of the bailout. "That is why we are in the mess that we are in."

Morici suggested that the taxpayer obligations to AIG could have been limited had the Treasury split off the company's poorly performing units from those parts of the insurance conglomerate that were profitable, selling the profitable divisions and providing taxpayer support to the problem parts of the firm.

No 'haircut'

On Capitol Hill, lawmakers talked boundlessly Wednesday about the bonuses and the outrage they created. But some were beginning to look beyond the controversy over bonuses to broader questions about the AIG bailout and how it got structured.

"It's not just about the bonuses," said Sen. John Ensign (R-Nev.). "It's that so much money went overseas. Why did money go out the door without a haircut?"

"The bonuses are just a tiny percentage of the money. It's the easiest things to get people outraged about."

Republicans made a point of bashing Geithner and his role, including meetings that he had with AIG and Goldman before he was Treasury secretary. Democrats laid responsibility on Paulson, President Bush's Treasury secretary.

The furor over the AIG bonus payments -- including questions about why Geithner didn't know about them earlier -- could create trouble for the Treasury secretary as he prepares for the rollout in the next week or so of an ambitious public-private partnership to buy $1 trillion of toxic assets from banks.

Asked where he thought Geithner would be a year from now, Webb declined to comment. But he did say that the Obama administration's hands were not entirely clean. "They have to accept some responsibility," Webb said.

Sen. John Cornyn (R-Texas) said it was hard to judge the motives of the architects of the AIG deal because the proceedings and decision making were cloaked in secrecy.

"It could be self dealing of the good-old-boy system," Cornyn said. "It may have been on the up-and-up. But we don't know because it wasn't transparent."

[email protected]

[email protected]

Times staff writer Ralph Vartabedian contributed to this report.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline DireWolf

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 I see another side to this AIG bullsh#t. I may be wrong and most likely am but this may be going exactly as planned to elicit this very response. Pressure is building in the form of anti government aggression from many different venues and will as has in the European countries reach a flash point. It may very well be that this is the ultimate in covert provocative practices.

 If we physically revolt they will unleash their hounds from hell and they get what they want, if we delay and peacefully protest they continue to rape the world and get what they want. 

 I cannot recall any time in history that when a government has reached the disreputable plateau that this one has, where it has not erupted in violence and much was lost, but at times nations were born and every once in a while one like ours as it was before our complacency allowed it to be stole from us.
 
Freedom and Liberty, or slavery and death, your choice, choose wisely.

Offline Dig

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ROLLING STONE: EXPLOSIVE!!!!!!!!!!!!!!
http://www.rollingstone.com/news/story/26794055/the_big_takeover
The Big Takeover
The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution

MATT TAIBBI

Posted Mar 19, 2009 12:49 PM


It's over — we're officially, royally f**ked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.

The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history — some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." In a pathetic attempt at name-dropping, he even whined that AIG was being "consumed by the same issues that are driving house prices down and 401K statements down and Warren Buffet's investment portfolio down."

Liddy made AIG sound like an orphan begging in a soup line, hungry and sick from being left out in someone else's financial weather. He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market.

Nor did anyone mention that when AIG finally got up from its seat at the Wall Street casino, broke and busted in the afterdawn light, it owed money all over town — and that a huge chunk of your taxpayer dollars in this particular bailout scam will be going to pay off the other high rollers at its table. Or that this was a casino unique among all casinos, one where middle-class taxpayers cover the bets of billionaires.

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

I. PATIENT ZERO

The best way to understand the financial crisis is to understand the meltdown at AIG. AIG is what happens when short, bald managers of otherwise boring financial bureaucracies start seeing Brad Pitt in the mirror. This is a company that built a giant fortune across more than a century by betting on safety-conscious policyholders — people who wear seat belts and build houses on high ground — and then blew it all in a year or two by turning their entire balance sheet over to a guy who acted like making huge bets with other people's money would make his dick bigger.

That guy — the Patient Zero of the global economic meltdown — was one Joseph Cassano, the head of a tiny, 400-person unit within the company called AIG Financial Products, or AIGFP. Cassano, a pudgy, balding Brooklyn College grad with beady eyes and way too much forehead, cut his teeth in the Eighties working for Mike Milken, the granddaddy of modern Wall Street debt alchemists. Milken, who pioneered the creative use of junk bonds, relied on messianic genius and a whole array of insider schemes to evade detection while wreaking financial disaster. Cassano, by contrast, was just a greedy little turd with a knack for selective accounting who ran his scam right out in the open, thanks to Washington's deregulation of the Wall Street casino. "It's all about the regulatory environment," says a government source involved with the AIG bailout. "These guys look for holes in the system, for ways they can do trades without government interference. Whatever is unregulated, all the action is going to pile into that."

The mess Cassano created had its roots in an investment boom fueled in part by a relatively new type of financial instrument called a collateralized-debt obligation. A CDO is like a box full of diced-up assets. They can be anything: mortgages, corporate loans, aircraft loans, credit-card loans, even other CDOs. So as X mortgage holder pays his bill, and Y corporate debtor pays his bill, and Z credit-card debtor pays his bill, money flows into the box.

The key idea behind a CDO is that there will always be at least some money in the box, regardless of how dicey the individual assets inside it are. No matter how you look at a single unemployed ex-con trying to pay the note on a six-bedroom house, he looks like a bad investment. But dump his loan in a box with a smorgasbord of auto loans, credit-card debt, corporate bonds and other crap, and you can be reasonably sure that somebody is going to pay up. Say $100 is supposed to come into the box every month. Even in an apocalypse, when $90 in payments might default, you'll still get $10. What the inventors of the CDO did is divide up the box into groups of investors and put that $10 into its own level, or "tranche." They then convinced ratings agencies like Moody's and S&P to give that top tranche the highest AAA rating — meaning it has close to zero credit risk.

Suddenly, thanks to this financial seal of approval, banks had a way to turn their shittiest mortgages and other financial waste into investment-grade paper and sell them to institutional investors like pensions and insurance companies, which were forced by regulators to keep their portfolios as safe as possible. Because CDOs offered higher rates of return than truly safe products like Treasury bills, it was a win-win: Banks made a fortune selling CDOs, and big investors made much more holding them.

The problem was, none of this was based on reality. "The banks knew they were selling crap," says a London-based trader from one of the bailed-out companies. To get AAA ratings, the CDOs relied not on their actual underlying assets but on crazy mathematical formulas that the banks cooked up to make the investments look safer than they really were. "They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."

Now that even the crappiest mortgages could be sold to conservative investors, the CDOs spurred a massive explosion of irresponsible and predatory lending. In fact, there was such a crush to underwrite CDOs that it became hard to find enough subprime mortgages — read: enough unemployed meth dealers willing to buy million-dollar homes for no money down — to fill them all. As banks and investors of all kinds took on more and more in CDOs and similar instruments, they needed some way to hedge their massive bets — some kind of insurance policy, in case the housing bubble burst and all that debt went south at the same time. This was particularly true for investment banks, many of which got stuck holding or "warehousing" CDOs when they wrote more than they could sell. And that's were Joe Cassano came in.

Known for his boldness and arrogance, Cassano took over as chief of AIGFP in 2001. He was the favorite of Maurice "Hank" Greenberg, the head of AIG, who admired the younger man's hard-driving ways, even if neither he nor his successors fully understood exactly what it was that Cassano did. According to a source familiar with AIG's internal operations, Cassano basically told senior management, "You know insurance, I know investments, so you do what you do, and I'll do what I do — leave me alone." Given a free hand within the company, Cassano set out from his offices in London to sell a lucrative form of "insurance" to all those investors holding lots of CDOs. His tool of choice was another new financial instrument known as a credit-default swap, or CDS.

The CDS was popularized by J.P. Morgan, in particular by a group of young, creative bankers who would later become known as the "Morgan Mafia," as many of them would go on to assume influential positions in the finance world. In 1994, in between booze and games of tennis at a resort in Boca Raton, Florida, the Morgan gang plotted a way to help boost the bank's returns. One of their goals was to find a way to lend more money, while working around regulations that required them to keep a set amount of cash in reserve to back those loans. What they came up with was an early version of the credit-default swap.

In its simplest form, a CDS is just a bet on an outcome. Say Bank A writes a million-dollar mortgage to the Pope for a town house in the West Village. Bank A wants to hedge its mortgage risk in case the Pope can't make his monthly payments, so it buys CDS protection from Bank B, wherein it agrees to pay Bank B a premium of $1,000 a month for five years. In return, Bank B agrees to pay Bank A the full million-dollar value of the Pope's mortgage if he defaults. In theory, Bank A is covered if the Pope goes on a meth binge and loses his job.

When Morgan presented their plans for credit swaps to regulators in the late Nineties, they argued that if they bought CDS protection for enough of the investments in their portfolio, they had effectively moved the risk off their books. Therefore, they argued, they should be allowed to lend more, without keeping more cash in reserve. A whole host of regulators — from the Federal Reserve to the Office of the Comptroller of the Currency — accepted the argument, and Morgan was allowed to put more money on the street.

What Cassano did was to transform the credit swaps that Morgan popularized into the world's largest bet on the housing boom. In theory, at least, there's nothing wrong with buying a CDS to insure your investments. Investors paid a premium to AIGFP, and in return the company promised to pick up the tab if the mortgage-backed CDOs went bust. But as Cassano went on a selling spree, the deals he made differed from traditional insurance in several significant ways. First, the party selling CDS protection didn't have to post any money upfront. When a $100 corporate bond is sold, for example, someone has to show 100 actual dollars. But when you sell a $100 CDS guarantee, you don't have to show a dime. So Cassano could sell investment banks billions in guarantees without having any single asset to back it up.

Secondly, Cassano was selling so-called "naked" CDS deals. In a "naked" CDS, neither party actually holds the underlying loan. In other words, Bank B not only sells CDS protection to Bank A for its mortgage on the Pope — it turns around and sells protection to Bank C for the very same mortgage. This could go on ad nauseam: You could have Banks D through Z also betting on Bank A's mortgage. Unlike traditional insurance, Cassano was offering investors an opportunity to bet that someone else's house would burn down, or take out a term life policy on the guy with AIDS down the street. It was no different from gambling, the Wall Street version of a bunch of frat brothers betting on Jay Feely to make a field goal. Cassano was taking book for every bank that bet short on the housing market, but he didn't have the cash to pay off if the kick went wide.

In a span of only seven years, Cassano sold some $500 billion worth of CDS protection, with at least $64 billion of that tied to the subprime mortgage market. AIG didn't have even a fraction of that amount of cash on hand to cover its bets, but neither did it expect it would ever need any reserves. So long as defaults on the underlying securities remained a highly unlikely proposition, AIG was essentially collecting huge and steadily climbing premiums by selling insurance for the disaster it thought would never come.

Initially, at least, the revenues were enormous: AIGFP's returns went from $737 million in 1999 to $3.2 billion in 2005. Over the past seven years, the subsidiary's 400 employees were paid a total of $3.5 billion; Cassano himself pocketed at least $280 million in compensation. Everyone made their money — and then it all went to shit.

II. THE REGULATORS

Cassano's outrageous gamble wouldn't have been possible had he not had the good fortune to take over AIGFP just as Sen. Phil Gramm — a grinning, laissez-faire ideologue from Texas — had finished engineering the most dramatic deregulation of the financial industry since Emperor Hien Tsung invented paper money in 806 A.D. For years, Washington had kept a watchful eye on the nation's banks. Ever since the Great Depression, commercial banks — those that kept money on deposit for individuals and businesses — had not been allowed to double as investment banks, which raise money by issuing and selling securities. The Glass-Steagall Act, passed during the Depression, also prevented banks of any kind from getting into the insurance business.

But in the late Nineties, a few years before Cassano took over AIGFP, all that changed. The Democrats, tired of getting slaughtered in the fundraising arena by Republicans, decided to throw off their old reliance on unions and interest groups and become more "business-friendly." Wall Street responded by flooding Washington with money, buying allies in both parties. In the 10-year period beginning in 1998, financial companies spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. They quickly got what they paid for. In 1999, Gramm co-sponsored a bill that repealed key aspects of the Glass-Steagall Act, smoothing the way for the creation of financial megafirms like Citigroup. The move did away with the built-in protections afforded by smaller banks. In the old days, a local banker knew the people whose loans were on his balance sheet: He wasn't going to give a million-dollar mortgage to a homeless meth addict, since he would have to keep that loan on his books. But a giant merged bank might write that loan and then sell it off to some fool in China, and who cared?

The very next year, Gramm compounded the problem by writing a sweeping new law called the Commodity Futures Modernization Act that made it impossible to regulate credit swaps as either gambling or securities. Commercial banks — which, thanks to Gramm, were now competing directly with investment banks for customers — were driven to buy credit swaps to loosen capital in search of higher yields. "By ruling that credit-default swaps were not gaming and not a security, the way was cleared for the growth of the market," said Eric Dinallo, head of the New York State Insurance Department.

The blanket exemption meant that Joe Cassano could now sell as many CDS contracts as he wanted, building up as huge a position as he wanted, without anyone in government saying a word. "You have to remember, investment banks aren't in the business of making huge directional bets," says the government source involved in the AIG bailout. When investment banks write CDS deals, they hedge them. But insurance companies don't have to hedge. And that's what AIG did. "They just bet massively long on the housing market," says the source. "Billions and billions."

In the biggest joke of all, Cassano's wheeling and dealing was regulated by the Office of Thrift Supervision, an agency that would prove to be defiantly uninterested in keeping watch over his operations. How a behemoth like AIG came to be regulated by the little-known and relatively small OTS is yet another triumph of the deregulatory instinct. Under another law passed in 1999, certain kinds of holding companies could choose the OTS as their regulator, provided they owned one or more thrifts (better known as savings-and-loans). Because the OTS was viewed as more compliant than the Fed or the Securities and Exchange Commission, companies rushed to reclassify themselves as thrifts. In 1999, AIG purchased a thrift in Delaware and managed to get approval for OTS regulation of its entire operation.

Making matters even more hilarious, AIGFP — a London-based subsidiary of an American insurance company — ought to have been regulated by one of Europe's more stringent regulators, like Britain's Financial Services Authority. But the OTS managed to convince the Europeans that it had the muscle to regulate these giant companies. By 2007, the EU had conferred legitimacy to OTS supervision of three mammoth firms — GE, AIG and Ameriprise.

That same year, as the subprime crisis was exploding, the Government Accountability Office criticized the OTS, noting a "disparity between the size of the agency and the diverse firms it oversees." Among other things, the GAO report noted that the entire OTS had only one insurance specialist on staff — and this despite the fact that it was the primary regulator for the world's largest insurer!

"There's this notion that the regulators couldn't do anything to stop AIG," says a government official who was present during the bailout. "That's bullshit. What you have to understand is that these regulators have ultimate power. They can send you a letter and say, 'You don't exist anymore,' and that's basically that. They don't even really need due process. The OTS could have said, 'We're going to pull your charter; we're going to pull your license; we're going to sue you.' And getting sued by your primary regulator is the kiss of death."

When AIG finally blew up, the OTS regulator ostensibly in charge of overseeing the insurance giant — a guy named C.K. Lee — basically admitted that he had blown it. His mistake, Lee said, was that he believed all those credit swaps in Cassano's portfolio were "fairly benign products." Why? Because the company told him so. "The judgment the company was making was that there was no big credit risk," he explained. (Lee now works as Midwest region director of the OTS; the agency declined to make him available for an interview.)

In early March, after the latest bailout of AIG, Treasury Secretary Timothy Geithner took what seemed to be a thinly veiled shot at the OTS, calling AIG a "huge, complex global insurance company attached to a very complicated investment bank/hedge fund that was allowed to build up without any adult supervision." But even without that "adult supervision," AIG might have been OK had it not been for a complete lack of internal controls. For six months before its meltdown, according to insiders, the company had been searching for a full-time chief financial officer and a chief risk-assessment officer, but never got around to hiring either. That meant that the 18th-largest company in the world had no one checking to make sure its balance sheet was safe and no one keeping track of how much cash and assets the firm had on hand. The situation was so bad that when outside consultants were called in a few weeks before the bailout, senior executives were unable to answer even the most basic questions about their company — like, for instance, how much exposure the firm had to the residential-mortgage market.

III. THE CRASH

Ironically, when reality finally caught up to Cassano, it wasn't because the housing market crapped but because of AIG itself. Before 2005, the company's debt was rated triple-A, meaning he didn't need to post much cash to sell CDS protection: The solid creditworthiness of AIG's name was guarantee enough. But the company's crummy accounting practices eventually caused its credit rating to be downgraded, triggering clauses in the CDS contracts that forced Cassano to post substantially more collateral to back his deals.

By the fall of 2007, it was evident that AIGFP's portfolio had turned poisonous, but like every good Wall Street huckster, Cassano schemed to keep his insane, Earth-swallowing gamble hidden from public view. That August, balls bulging, he announced to investors on a conference call that "it is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing $1 in any of those transactions." As he spoke, his CDS portfolio was racking up $352 million in losses. When the growing credit crunch prompted senior AIG executives to re-examine its liabilities, a company accountant named Joseph St. Denis became "gravely concerned" about the CDS deals and their potential for mass destruction. Cassano responded by personally forcing the poor sap out of the firm, telling him he was "deliberately excluded" from the financial review for fear that he might "pollute the process."

The following February, when AIG posted $11.5 billion in annual losses, it announced the resignation of Cassano as head of AIGFP, saying an auditor had found a "material weakness" in the CDS portfolio. But amazingly, the company not only allowed Cassano to keep $34 million in bonuses, it kept him on as a consultant for $1 million a month. In fact, Cassano remained on the payroll and kept collecting his monthly million through the end of September 2008, even after taxpayers had been forced to hand AIG $85 billion to patch up his f**k-ups. When asked in October why the company still retained Cassano at his $1 million-a-month rate despite his role in the probable downfall of Western civilization, CEO Martin Sullivan told Congress with a straight face that AIG wanted to "retain the 20-year knowledge that Mr. Cassano had." (Cassano, who is apparently hiding out in his lavish town house near Harrods in London, could not be reached for comment.)

What sank AIG in the end was another credit downgrade. Cassano had written so many CDS deals that when the company was facing another downgrade to its credit rating last September, from AA to A, it needed to post billions in collateral — not only more cash than it had on its balance sheet but more cash than it could raise even if it sold off every single one of its liquid assets. Even so, management dithered for days, not believing the company was in serious trouble. AIG was a dried-up prune, sapped of any real value, and its top executives didn't even know it.

On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS.

"We sat down with Paulson, Geithner and Dinallo," says a person present at the negotiations. "I didn't see the OTS even once."

On September 14th, according to another person present, Treasury officials presented Blankfein and other bankers in attendance with an absurd proposal: "They basically asked them to spend a day and check to see if they could raise the money privately." The laughably short time span to complete the mammoth task made the answer a foregone conclusion. At the end of the day, the bankers came back and told the government officials, gee, we checked, but we can't raise that much. And the bailout was on.

A short time later, it came out that AIG was planning to pay some $90 million in deferred compensation to former executives, and to accelerate the payout of $277 million in bonuses to others — a move the company insisted was necessary to "retain key employees." When Congress balked, AIG canceled the $90 million in payments.

Then, in January 2009, the company did it again. After all those years letting Cassano run wild, and after already getting caught paying out insane bonuses while on the public till, AIG decided to pay out another $450 million in bonuses. And to whom? To the 400 or so employees in Cassano's old unit, AIGFP, which is due to go out of business shortly! Yes, that's right, an average of $1.1 million in taxpayer-backed money apiece, to the very people who spent the past decade or so punching a hole in the fabric of the universe!

"We, uh, needed to keep these highly expert people in their seats," AIG spokeswoman Christina Pretto says to me in early February.

"But didn't these 'highly expert people' basically destroy your company?" I ask.

Pretto protests, says this isn't fair. The employees at AIGFP have already taken pay cuts, she says. Not retaining them would dilute the value of the company even further, make it harder to wrap up the unit's operations in an orderly fashion.

The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."

IV. THE POWER GRAB

So that's the first step in wall street's power grab: making up things like credit-default swaps and collateralized-debt obligations, financial products so complex and inscrutable that ordinary American dumb people — to say nothing of federal regulators and even the CEOs of major corporations like AIG — are too intimidated to even try to understand them. That, combined with wise political investments, enabled the nation's top bankers to effectively scrap any meaningful oversight of the financial industry. In 1997 and 1998, the years leading up to the passage of Phil Gramm's fateful act that gutted Glass-Steagall, the banking, brokerage and insurance industries spent $350 million on political contributions and lobbying. Gramm alone — then the chairman of the Senate Banking Committee — collected $2.6 million in only five years. The law passed 90-8 in the Senate, with the support of 38 Democrats, including some names that might surprise you: Joe Biden, John Kerry, Tom Daschle, Dick Durbin, even John Edwards.

The act helped create the too-big-to-fail financial behemoths like Citigroup, AIG and Bank of America — and in turn helped those companies slowly crush their smaller competitors, leaving the major Wall Street firms with even more money and power to lobby for further deregulatory measures. "We're moving to an oligopolistic situation," Kenneth Guenther, a top executive with the Independent Community Bankers of America, lamented after the Gramm measure was passed.

The situation worsened in 2004, in an extraordinary move toward deregulation that never even got to a vote. At the time, the European Union was threatening to more strictly regulate the foreign operations of America's big investment banks if the U.S. didn't strengthen its own oversight. So the top five investment banks got together on April 28th of that year and — with the helpful assistance of then-Goldman Sachs chief and future Treasury Secretary Hank Paulson — made a pitch to George Bush's SEC chief at the time, William Donaldson, himself a former investment banker. The banks generously volunteered to submit to new rules restricting them from engaging in excessively risky activity. In exchange, they asked to be released from any lending restrictions. The discussion about the new rules lasted just 55 minutes, and there was not a single representative of a major media outlet there to record the fateful decision.

Donaldson OK'd the proposal, and the new rules were enough to get the EU to drop its threat to regulate the five firms. The only catch was, neither Donaldson nor his successor, Christopher Cox, actually did any regulating of the banks. They named a commission of seven people to oversee the five companies, whose combined assets came to total more than $4 trillion. But in the last year and a half of Cox's tenure, the group had no director and did not complete a single inspection. Great deal for the banks, which originally complained about being regulated by both Europe and the SEC, and ended up being regulated by no one.

Once the capital requirements were gone, those top five banks went hog-wild, jumping ass-first into the then-raging housing bubble. One of those was Bear Stearns, which used its freedom to drown itself in bad mortgage loans. In the short period between the 2004 change and Bear's collapse, the firm's debt-to-equity ratio soared from 12-1 to an insane 33-1. Another culprit was Goldman Sachs, which also had the good fortune, around then, to see its CEO, a bald-headed Frankensteinian goon named Hank Paulson (who received an estimated $200 million tax deferral by joining the government), ascend to Treasury secretary.

Freed from all capital restraints, sitting pretty with its man running the Treasury, Goldman jumped into the housing craze just like everyone else on Wall Street. Although it famously scored an $11 billion coup in 2007 when one of its trading units smartly shorted the housing market, the move didn't tell the whole story. In truth, Goldman still had a huge exposure come that fateful summer of 2008 — to none other than Joe Cassano.

Goldman Sachs, it turns out, was Cassano's biggest customer, with $20 billion of exposure in Cassano's CDS book. Which might explain why Goldman chief Lloyd Blankfein was in the room with ex-Goldmanite Hank Paulson that weekend of September 13th, when the federal government was supposedly bailing out AIG.

When asked why Blankfein was there, one of the government officials who was in the meeting shrugs. "One might say that it's because Goldman had so much exposure to AIGFP's portfolio," he says. "You'll never prove that, but one might suppose."

Market analyst Eric Salzman is more blunt. "If AIG went down," he says, "there was a good chance Goldman would not be able to collect." The AIG bailout, in effect, was Goldman bailing out Goldman.

Eventually, Paulson went a step further, elevating another ex-Goldmanite named Edward Liddy to run AIG — a company whose bailout money would be coming, in part, from the newly created TARP program, administered by another Goldman banker named Neel Kashkari.

V. REPO MEN

There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That's the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers' credit card.

The people who have spent their lives cloistered in this Wall Street community aren't much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don't know what the hell LIBOR is or how a REIT works or how to use the word "zero coupon bond" in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.

That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize "toxic" risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage holders and other such financial losers.

Some aspects of the bailout were secretive to the point of absurdity. In fact, if you look closely at just a few lines in the Federal Reserve's weekly public disclosures, you can literally see the moment where a big chunk of your money disappeared for good. The H4 report (called "Factors Affecting Reserve Balances") summarizes the activities of the Fed each week. You can find it online, and it's pretty much the only thing the Fed ever tells the world about what it does. For the week ending February 18th, the number under the heading "Repurchase Agreements" on the table is zero. It's a significant number.

Why? In the pre-crisis days, the Fed used to manage the money supply by periodically buying and selling securities on the open market through so-called Repurchase Agreements, or Repos. The Fed would typically dump $25 billion or so in cash onto the market every week, buying up Treasury bills, U.S. securities and even mortgage-backed securities from institutions like Goldman Sachs and J.P. Morgan, who would then "repurchase" them in a short period of time, usually one to seven days. This was the Fed's primary mechanism for controlling interest rates: Buying up securities gives banks more money to lend, which makes interest rates go down. Selling the securities back to the banks reduces the money available for lending, which makes interest rates go up.

If you look at the weekly H4 reports going back to the summer of 2007, you start to notice something alarming. At the start of the credit crunch, around August of that year, you see the Fed buying a few more Repos than usual — $33 billion or so. By November, as private-bank reserves were dwindling to alarmingly low levels, the Fed started injecting even more cash than usual into the economy: $48 billion. By late December, the number was up to $58 billion; by the following March, around the time of the Bear Stearns rescue, the Repo number had jumped to $77 billion. In the week of May 1st, 2008, the number was $115 billion — "out of control now," according to one congressional aide. For the rest of 2008, the numbers remained similarly in the stratosphere, the Fed pumping as much as $125 billion of these short-term loans into the economy — until suddenly, at the start of this year, the number drops to nothing. Zero.

The reason the number has dropped to nothing is that the Fed had simply stopped using relatively transparent devices like repurchase agreements to pump its money into the hands of private companies. By early 2009, a whole series of new government operations had been invented to inject cash into the economy, most all of them completely secretive and with names you've never heard of. There is the Term Auction Facility, the Term Securities Lending Facility, the Primary Dealer Credit Facility, the Commercial Paper Funding Facility and a monster called the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (boasting the chat-room horror-show acronym ABCPMMMFLF). For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.

While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of these newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.

No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.

"They're supposed to be temporary," says Paul-Martin Foss, an aide to Rep. Ron Paul. "But we keep getting notices every six months or so that they're being renewed. They just sort of quietly announce it."

None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go f**k itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.

VI. WINNERS AND LOSERS

Stevens isn't the only person in Congress to be given the finger by the Fed. In January, when Rep. Alan Grayson of Florida asked Federal Reserve vice chairman Donald Kohn where all the money went — only $1.2 trillion had vanished by then — Kohn gave Grayson a classic eye roll, saying he would be "very hesitant" to name names because it might discourage banks from taking the money.

"Has that ever happened?" Grayson asked. "Have people ever said, 'We will not take your $100 billion because people will find out about it?'"

"Well, we said we would not publish the names of the borrowers, so we have no test of that," Kohn answered, visibly annoyed with Grayson's meddling.

Grayson pressed on, demanding to know on what terms the Fed was lending the money. Presumably it was buying assets and making loans, but no one knew how it was pricing those assets — in other words, no one knew what kind of deal it was striking on behalf of taxpayers. So when Grayson asked if the purchased assets were "marked to market" — a methodology that assigns a concrete value to assets, based on the market rate on the day they are traded — Kohn answered, mysteriously, "The ones that have market values are marked to market." The implication was that the Fed was purchasing derivatives like credit swaps or other instruments that were basically impossible to value objectively — paying real money for God knows what.

"Well, how much of them don't have market values?" asked Grayson. "How much of them are worthless?"

"None are worthless," Kohn snapped.

"Then why don't you mark them to market?" Grayson demanded.

"Well," Kohn sighed, "we are marking the ones to market that have market values."

In essence, the Fed was telling Congress to lay off and let the experts handle things. "It's like buying a car in a used-car lot without opening the hood, and saying, 'I think it's fine,'" says Dan Fuss, an analyst with the investment firm Loomis Sayles. "The salesman says, 'Don't worry about it. Trust me.' It'll probably get us out of the lot, but how much farther? None of us knows."

When one considers the comparatively extensive system of congressional checks and balances that goes into the spending of every dollar in the budget via the normal appropriations process, what's happening in the Fed amounts to something truly revolutionary — a kind of shadow government with a budget many times the size of the normal federal outlay, administered dictatorially by one man, Fed chairman Ben Bernanke. "We spend hours and hours and hours arguing over $10 million amendments on the floor of the Senate, but there has been no discussion about who has been receiving this $3 trillion," says Sen. Bernie Sanders. "It is beyond comprehension."

Count Sanders among those who don't buy the argument that Wall Street firms shouldn't have to face being outed as recipients of public funds, that making this information public might cause investors to panic and dump their holdings in these firms. "I guess if we made that public, they'd go on strike or something," he muses.

And the Fed isn't the only arm of the bailout that has closed ranks. The Treasury, too, has maintained incredible secrecy surrounding its implementation even of the TARP program, which was mandated by Congress. To this date, no one knows exactly what criteria the Treasury Department used to determine which banks received bailout funds and which didn't — particularly the first $350 billion given out under Bush appointee Hank Paulson.

The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.

"Do you believe that?" she says incredulously. "That's not what we had in mind."

Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.

This cozy arrangement created yet another opportunity for big banks to devour market share at the expense of smaller regional lenders. While all the bigwigs at Citi and Goldman and Bank of America who had Paulson on speed-dial got bailed out right away — remember that TARP was originally passed because money had to be lent right now, that day, that minute, to stave off emergency — many small banks are still waiting for help. Five months into the TARP program, some not only haven't received any funds, they haven't even gotten a call back about their applications.

"There's definitely a feeling among community bankers that no one up there cares much if they make it or not," says Tanya Wheeless, president of the Arizona Bankers Association.

Which, of course, is exactly the opposite of what should be happening, since small, regional banks are far less guilty of the kinds of predatory lending that sank the economy. "They're not giving out subprime loans or easy credit," says Wheeless. "At the community level, it's much more bread-and-butter banking."

Nonetheless, the lion's share of the bailout money has gone to the larger, so-called "systemically important" banks. "It's like Treasury is picking winners and losers," says one state banking official who asked not to be identified.

This itself is a hugely important political development. In essence, the bailout accelerated the decline of regional community lenders by boosting the political power of their giant national competitors.

Which, when you think about it, is insane: What had brought us to the brink of collapse in the first place was this relentless instinct for building ever-larger megacompanies, passing deregulatory measures to gradually feed all the little fish in the sea to an ever-shrinking pool of Bigger Fish. To fix this problem, the government should have slowly liquidated these monster, too-big-to-fail firms and broken them down to smaller, more manageable companies. Instead, federal regulators closed ranks and used an almost completely secret bailout process to double down on the same faulty, merger-happy thinking that got us here in the first place, creating a constellation of megafirms under government control that are even bigger, more unwieldy and more crammed to the gills with systemic risk.

In essence, Paulson and his cronies turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.

In other words, it's AIG's rip-roaringly shitty business model writ almost inconceivably massive — to echo Geithner, a huge, complex global company attached to a very complicated investment bank/hedge fund that's been allowed to build up without adult supervision. How much of what kinds of crap is actually on our balance sheet, and what did we pay for it? When exactly will the rent come due, when will the money run out? Does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now? Is there a dictionary word that even describes what we are now? It would be funny, if it weren't such a nightmare.

VII. YOU DON'T GET IT

The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide.

In fact, most of Geithner's early moves reek strongly of Paulsonism. He has continually talked about partnering with private investors to create a so-called "bad bank" that would systemically relieve private lenders of bad assets — the kind of massive, opaque, quasi-private bureaucratic nightmare that Paulson specialized in. Geithner even refloated a Paulson proposal to use TALF, one of the Fed's new facilities, to essentially lend cheap money to hedge funds to invest in troubled banks while practically guaranteeing them enormous profits.

God knows exactly what this does for the taxpayer, but hedge-fund managers sure love the idea. "This is exactly what the financial system needs," said Andrew Feldstein, CEO of Blue Mountain Capital and one of the Morgan Mafia. Strangely, there aren't many people who don't run hedge funds who have expressed anything like that kind of enthusiasm for Geithner's ideas.

As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.

The most galling thing about this financial crisis is that so many Wall Street types think they actually deserve not only their huge bonuses and lavish lifestyles but the awesome political power their own mistakes have left them in possession of. When challenged, they talk about how hard they work, the 90-hour weeks, the stress, the failed marriages, the hemorrhoids and gallstones they all get before they hit 40.

"But wait a minute," you say to them. "No one ever asked you to stay up all night eight days a week trying to get filthy rich shorting what's left of the American auto industry or selling $600 billion in toxic, irredeemable mortgages to ex-strippers on work release and Taco Bell clerks. Actually, come to think of it, why are we even giving taxpayer money to you people? Why are we not throwing your ass in jail instead?"

But before you even finish saying that, they're rolling their eyes, because You Don't Get It. These people were never about anything except turning money into money, in order to get more money; valueswise they're on par with crack addicts, or obsessive sexual deviants who burgle homes to steal panties. Yet these are the people in whose hands our entire political future now rests.

Good luck with that, America. And enjoy tax season.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline TahoeBlue

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Quote from: Sane date=1237430134
Does anyone know if there is a script for "Who Killed John O'Neil"?

They lay it all out concerning AIG.

Yes there is a Kroll - AIG connection....

http://wkjo.com/ "Who Killed John O'Neill?"
http://wkjo.com/subtitles/

http://wkjo.com/images/cms/WKJO/WKJO_English_Subtitles.srt

...

My friend, Kroll is bigger than you could possibly imagine.

Kroll Associates is a global security and intelligence company.

Publicly traded and privately managed, Kroll specializes in large building security and industrial espionage.

In 1993, Kroll got a contract to manage security at the World Trade Center.

They held that position up until the moment the Towers fell.

The current CEO of Kroll is... Michael Cherkasky.

Cherkasky is a former assistant district attorney under Robert Morgenthau in Manhattan.

Former employees of Kroll include people like: William Bratton.

Former police Commissioner in Boston and New York City, and now Chief of the LAPD.
...
So, you really want to know what happened on 9/11?

I am prepared to listen.

On July 8, 2004, Kroll was acquired by insurance brokerage giant Marsh McLennan Companies Inc., run by Jeffrey Greenberg, son of AIG CEO and former director of the Council on Foreign Relations, Maurice "Hank" Greenberg.

On October 25, 2004 Jeffrey Greenberg resigned as Chairman and CEO of Marsh McLennan Companies, Inc. The board named Michael G. Cherkasky President and CEO of Marsh & McLennan Companies, Inc. and Chairman and CEO, Marsh Inc.

Banker and oilman Khalid bin Mahfouz is allegedly under house arrest in Saudi Arabia.
His actions regarding the BCCI scandal and its money laundering practices have never been completely unearthed.

As of the release of this film, bin Mahfouz claims he has never financed Al Qaeda and refutes former CIA director James Woolsey's contention that he is Osama bin Laden's half brother.

On September 10, 2001, it is reported that Osama bin Laden checked into a hospital in Rawalpindi, Pakistan.

Rawalpindi is the headquarters of both Pakistani intelligence and the Pakistani military.

Presumably, no one has seen bin Laden since.

The 9/11 Commission, chaired by Thomas Kean, released its findings in July of 2004.

Although the report indicates that sweeping changes must be made within America's intelligence community, at no point does it mention any relevant connection between the CIA, Al Qaeda, the ISI and Osama bin Laden.

To this date, this is the only official public inquiry into the 9/11 attacks.

As of the release of this film, 2,998 people died in the 9/11 attacks.

One of those victims is reportedly FBI Agent John O'Neill.

However, it should be noted that the body was identified by Kroll employee Jerome Hauer.

The perpetrators of the attacks remain at large.
Behold, happy is the man whom God correcteth: therefore despise not thou the chastening of the Almighty: For he maketh sore, and bindeth up: he woundeth, and his hands make whole ; He shall deliver thee in six troubles: yea, in seven there shall no evil touch thee. - Job 5

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The relationship between AIG and CIA
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=125&topic_id=92675&mesg_id=96045
American International Group

(...) AIG is a public company. Its largest single shareholder with 13.62 percent of AIG stock is Starr International Company (SICO), a private company headquartered in the tax haven of Bermuda. Greenberg owns 21.86 percent of SICO. Forbes says Greenberg has a net-worth of $3.6 billion, making him the world’s 132nd richest man. Greenberg was elected AIG president in 1962, CEO in 1967 and chairman in 1989.

(...) Greenberg has enviable political clout, never so much in evidence as when, with the help of Henry Kissinger -- chair of AIG's international advisory committee and a paid consultant via Kissinger Associates – AIG became in 1995, the first company licensed to sell insurance in China. AIG was the only foreign firm that owned 100 percent of its license there.

The American International Group at its origins was linked to the OSS (Office of Strategic Services) the forerunner of the CIA. It grew from the Asia Life/C. V. Starr companies founded by Cornelius Starr who started his insurance empire in Shanghai in 1919, the first westerner to market insurance in China.

Starr served with the OSS during World War II, and the Starr Corporation, located in the same building as the OSS in New York, provided intelligence on shipping, manufacturing and industrial bombing targets in Asia and Germany. The companies' biggest shareholder was Starr International Company (SICO), a private holding company incorporated in offshore Panama and with principal executive offices in offshore Bermuda, to avoid U.S. regulation and taxes. Starr left Greenberg a large block of Starr International stock.

http://www.corpwatch.org/article.php?id=11657



August 14, 2001
A.I.G.
Part Two of a Multi-Part Series
by
Michael C. Ruppert

There are mounting holes in the story of a woman, Coral Talavera Baca (henceforth referred to by her maiden name Talavera), who has claimed to be the wife of Medellin Cartel co-founder, Carlos Lehder, deepening the mystery about relationships between her, Lehder himself, the insurance giant American International Group (AIG), and the Central Intelligence Agency. These new discrepancies, including her prior confirmation of the authenticity of documents now suspected of being forged, have raised the possibility that the U.S. Government, in partnership with AIG, has been deliberately planting false information in the press to support the woman's claims about Lehder's reported freedom and activities. Talavera has been simultaneously described as either Staff Counsel for AIG's in house San Francisco law firm or as its office manager.

In Part I of this series we reported that other journalists, who have asked not to be identified, had received the same documents we continue to examine here. Some of those documents purport to be official reports from the U.S. Treasury and U.S. Attorney's offices. As FTW moves deeper into its multi-part investigation - inspired by revelations of possible 1987-92 drug money laundering involving AIG, Goldman Sachs and the Arkansas Development Financial Authority (ADFA) - attention now focuses on Talavera's employer, AIG. These events increased my interest in the 1987 founding of Coral Reinsurance (Coral Re) by AIG, Goldman Sachs (whose then Vice Chairman Robert Rubin served as Treasury Secretary in the Clinton Administration) and ADFA. Lehder, arrested in 1987, was allowed to keep almost $3 billion in assets in a move severely criticized by Merkle. Where did that money go? Was it hidden it in a major insurance company with cash flows large enough to conceal it? This question, more than any other, except establishing Lehder's current status, prompted me to begin this investigation.

What is known about the firm which employs Talavera, who is not a lawyer, and permits her to represent herself as "Staff Counsel" for its San Francisco legal office while simultaneously representing herself as the wife of a one-time cocaine cartel head? On June 22, just two days after I had lunch with her and confirmed that I was writing a story, a receptionist at Brown and Boland, AIG's San Francisco in-house counsel, told me and others that Talavera had fled her employment and gone to Cuba. Yet the firm, located in the AIG building and using AIG e-mail addresses, is currently announcing in new, dated voice mail messages, that she is still the office manager.

FTW has also conducted an extensive investigation into AIG and its predecessors, including the C. V. Starr Insurance Companies, revealing deep connections to US intelligence dating back to the Office of Strategic Services (OSS) in World War II. These connections include documented CIA operatives connected to drug smuggling from Southeast Asia and a current board member, Frank Wisner, Jr., whose father was a key figure in the creation of the CIA. History, as well as AIG's current operations, suggest that these relationships continue unabated today.

http://www.fromthewilderness.com/free/ciadrugs/part_2.h...


Are we allowed to know what is behind the scenes. At least Von Buelow, former German Minister of Defense, seems to think so and said back in Jan 2002 that 9/11 looked like an inside job.

http://www.orwelltoday.com/wtc911book.shtml

He doesn't like intelligence bureaus either, because even as a mere Minister of Defense he wasn't allowed to know what it was what they did. Just to give you an idea how shadow government they really are.


Former Top German Minister Rejects Official Story Of 911 Attacks

15/16 January 2002

Former German Cabinet Minister Attacks Official Brainwashing On September 11 Issue
Points at "Mad Dog" Zbig and Huntington

Original source: Tagesspiegel, 13 Jan 2002

Q:
Your career actually speaks against the idea that you are not in your right mind. You were already in the 1970s, state secretary in the Defense Ministry; in 1993 you were the SPD (Social Democratic Party) speaker in the Schalk-Golodkowski investigation committee--

Von Buelow:
And it all began there! Until that time, I did not have any great knowledge of the work of intelligence agencies. And now we had to take note of a great discrepancy: We shed light on the dealings of the Stasi and other East bloc intelligence agencies in the field of economic criminality, but as soon as we wanted to know something about the activities of the BND (German intelligence) or the CIA, it was mercilessly blocked. No information, no cooperation, nothing! That's when I was first taken aback.

Q:
Why don't you speculate on who it might have been.

Von Buelow:
With the help of the horrifying attacks, the Western mass democracies were subjected to brainwashing. The enemy image of anti-communism doesn't work any more; it is to be replaced by peoples of Islamic belief. They are accused of having given birth to suicidal terrorism.

Q:
Brainwashing? That's a tough term.

Von Buelow:
Yes? But the idea of the enemy image doesn't come from me. It comes from Zbigniew Brzezinski and Samuel Huntington, two policy-makers of American intelligence and foreign policy. Already in the middle of he 1990s, Huntingon believed, people in Europe and the U.S. needed someone they could hate - this would strengthen their identification with their own society. And Brzezinski, the mad dog, as adviser to President Jimmy Carter, campaigned for the exclusive right of the U.S. to seize all the raw materials of the world, especially oil and gas.

Q:
You don't think much of the earlier proposals by the Greens, who wanted to dismantle these agencies?

Von Buelow:
No. It is right to take a look behind the scenes. Getting intelligence about the intentions of an enemy, makes sense. It is important when one tries to put oneself into the mind of the enemy. Whoever wants to understand the CIA's methods, has to deal with its main tasks, covert operations: below the level of war, and outside international law, foreign states are to be influenced, by organizing insurrections, terrorist attacks, usually combined with drugs and weapons trade, and money laundering. This is essentially very simple: One arms violent people with weapons. Since, however, it must not under any circumstances come out, that there is an intelligence agency behind it, all traces are erased, with tremendous deployment of resources.

I have the impression that this kind of intelligence agency spends 90% of its time this way: creating false leads. So that, if anyone suspects the collaboration of the agencies, he is accused of the sickness of conspiracy madness. The truth often comes out only years later. CIA chief Allen Dulles once said: In case of doubt, I would even lie to the Congress!

Q:
How did you get the idea that there could be a link between the attacks and the American intelligence agencies?

Von Buelow:
Do you remember the first attack on the WorldTrade Center in 1993?

Q:
Six people were killed and over a thousand wounded, by a bomb explosion.

Von Buelow:
In the middle was the bombmaker, a former Egyptian officer. He had pulled together some Muslims for the attack. They were snuck into the country by the CIA, despite a State Department ban on their entry. At the same time, the leader of the band was an FBI informant.

And he made a deal with the authorities: At the last minute, the dangerous explosive material would be replaced by a harmless powder.

The FBI did not stick to the deal. The bomb exploded, so to speak, with the knowledge of the FBI. The official story of the crime was quickly found: The criminals were evil Muslims.

(...)
Q:
Do you criticize the German government for its reaction after Sept. 11?

Von Buelow:
No. To assume that the government were independent in these questions, would be naive.

http://www.ratical.org/ratville/CAH/VonBuelow.html
   
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From 9/11 Encyclopedia:
http://911review.org/Sept11Wiki/Greenberg,Maurice.shtml
Maurice "Hank" Greenberg, once floated as a possible CIA Director in 1995, is the CEO of AIG insurance (->), manager of the third largest capital investment pool in the world. Maurice Raymond Greenberg (AIG, Kroll, CFR) was born in New York City May 4, 1925, the son of Jacob Greenberg and Ada (Rheingold) Greenberg. The young man adopted the nickname "Hank" to make people think of a popular American baseball player with the name, Hank Greenberg. Greenberg served in the U.S. Army in the Korea conflict.

He joined the insurance firm, Continental Casualty Co., in 1952. Continental executive J. Milburn Smith recommended Greenberg to the C.V. Starr insurance/spy organization, which made Greenberg its vice president in 1960, its president and CEO in 1967, and its chairman, succeeding Starr, in 1969. Maurice Greenberg was deeply involved in chinese trade in the 80s, where Henry Kissinger (->) was one of his representatives.

In the China trade, Greenberg became very close to Shaul Eisenberg, the leader of the Asian section of the Israeli intelligence service Mossad, and agent for the sales of sophisticated military equipment to the Chinese military. From 1988 to 1995, Greenberg was a director of the New York Federal Reserve bank - this branch of the system is the main instrument through which Federal Reserve chiefs and the Bank of England traditionally execute their U.S. political-economic policy.

Greenberg was deputy chairman of the New York Fed in 1992 and 1993, and New York Fed chairman in 1994 and 1995. In 1993, Maurice Greenberg's American International Group (AIG ->), became co-owner of the "private spy agency", Kroll Associates (->), as a result of rescuing Kroll from bankruptcy with a cash infusion. Kroll was notorious during the 1980s as the "CIA of Wall Street" due to the prevalence of former CIA, FBI, Scotland Yard, British secret service and British Special Air Service men Kroll employed for corporate espionage in takeover bids, as well as for destabilization of foreign nations. During 1996, while Greenberg was deputy chairman of the Council on Foreign Relations (See Cfr), he chaired the CFR task force on intelligence, which published "Making Intelligence Smarter: The future of U.S. Intelligence." This report mostly served to exhibit Greenberg's access to the intelligence community; but he parlayed it into a nomination by Senator Arlen Specter and others, for Greenberg to be Director of the Cia.

Greenberg has used his connections to covert intelligence, supranational institutions, private bankers and speculators, and his huge global cash inflow, to shape a unique personal empire. Since 1997, Frank G. Wisner, Jr., has been a board member of Kroll , and is currently Greenberg's Deputy Chairman for External Affairs. Wisner's father was a founder of the U.S. Central Intelligence Agency, who killed himself over the scandal from his being duped by British-Soviet masterspy Kim Philby. Frank Wisner, Jr., is a director of the George Bush-linked energy giant Enron (a client for whom AIG negotiated payments from Peru over nationalization of Enron operations).

In the early 1990s, Miami-based private investigator Lou Polumbo joined Kroll Associates. According to sources in the industry, Polumbo brought with him a personal history of involvement with the Medallin and other South American narcotics cartels; his business included helping relocate some of the capabilities of these cartels out of Colombia. The deal to bring Polumbo into Kroll was worked out by Avram Shalom, the former head of Israel's Shin Beth secret police. Shalom went to work for Kroll; he had been fired as Shin Beth boss due to a scandalous massacre of Palestinians in the Israel-occupied territories by his Shin Beth agents.

Compare: AIG's long connection to CIA drug trafficking and covert operations was mentioned in a two-part series of Copvcia.Com, that was interrupted just prior to the attacks of September 11. AIG's stock has bounced back remarkably well since the attacks. Source: http://www.copvcia.com/stories/part_2.html
. (-> Kroll O'Gara )
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Whitewater, The Federal Reserve, and The C.I.A.
[This looks like it was before 9/11 WTF?!?!?!!?!!?!]
http://www.lectlaw.com/files/cur54.htm
by Sherman H. Skolnick

The monopoly press tells us that Whitewater is just a minor dispute over
a 69 thousand dollar real estate development. Oh yeah! Items left out by
the newsfakers:

#1. Bill and Hillary Clinton are a "CIA couple", each with a separate
agenda. Hillary was Board Chairman of the New World Foundation which
reportedly financed, with CIA funding, government provocateurs used to
try to discredit the Civil Rights and Peace movements. This Foundation
also acted as a conduit, reportedly, for CIA funds to other foundations.

At an early age, Bill Clinton went to Moscow and somehow grabbed, for
CIA, the secret transcript of Kruschev lambasting Stalinists.

#2. Bill Clinton, as Arkansas Governor, was part of CIA's gun and dope
smuggling through the airport at Mena. Some of his campaigns for
Governor were financed by Atlantic Research, a Virginia-based reputed
arms supplier and CIA contractor. With the proceeds of the dope and arms
smuggling, Bill has a secret interest in a tens of millions of dollars
Swiss account, code named Chelsea Jefferson -- Chelsea being his
daughter's first name and Jefferson his middle name.

#3. Hundreds of millions of dollars of dope and gun smuggling money went
through Bill's money laundry creature, Arkansas Development Finance
Authority. They, in turn, had a multi-million dollar relationship with
Sanwa Bank of Chicago. Headquartered in Osaka, Japan, the bank is
reportedly heavily implicated with the Japanese mafia, the Yakusa,
likewise headquartered in Osaka. (One and the same: the Japanese Secret
Police and the Yakusa.)

In 1984, Sanwa led the "hot money" withdrawal attack on Continental Bank
of Chicago, owned in great part by the Vatican. Following the collapse,
Sanwa was awarded sections of Continental's business. By the way, most
of the multi-millionaire judges on Chicago's Federal Court of Appeals
are heavily interlocked with Continental *and* *do* *not* *disqualify*
*themselves* *in* *related* *cases*. And now the Judges are tied to
Sanwa Bank and the Yakusa-dominated Bank America, one of three major
banks (Continental being one) in America formerly owned by the Pope.

#4. Arkansas Development Finance Authority and Sanwa Bank shared a deal
with Coral Reinsurance of the Barbados. Coral's main customer was
American International Group [AIG], a hundred billion dollar finance and
speculation nest -- Board Chairman being Maurice Greenburg, also Board
Chairman of the New York Federal Reserve District Bank, the most
powerful and conspiratorial in the Federal Reserve System.

In just a few weeks, AIG reportedly ran 450 million dollars through the
Barbados front. State and Federal regulators in four or more states and
districts have reportedly been investigating AIG's reputed money laundry
deals with Coral.

But there has been a vast whitewash. Recently, AIG chief Greenberg was
being considered to be appointed Director of Central Intelligence
(actually would be a step down from his conflict-of-interest position as
AIG chief and Board Chairman of N.Y. Fed!)

To summarize this and previous items: Whitewater reportedly incriminates
the following ----

-- Dan Rostenkowski and his Garfield Ridge Trust & Savings Bank;
Hillary's brother is also, reportedly, an owner.

-- Chicago Mercantile Exchange.

-- Chicago Board Options Exchange.

-- Chicago Stock Exchange and the Chicago Board of Trade.

-- American International Group and their chief, Maurice Greenberg.

-- Sanwa Bank and the Yakusa.

-- Continental Bank, now part of Yakusa's Bank America.

-- Many of the judges on Chicago's U.S. Court of Appeals, 7th Circuit.

So, is Whitewater just a dispute over a 69 thousand dollar real estate
transaction?
-----
Mr. Skolnick is chairman/founder, since 1963, of the public-interest
group, Citizens' Committee to Clean Up the Courts, which has for more
than 3 decades touched off some of the most profound bribery and similar
scandals in American history.

-----
Brought to you by - The 'Lectric Law Library
The Net's Finest Legal Resource For Legal Pros & Laypeople Alike.
http://www.lectlaw.com
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CASE STUDY: Funding terrorists at AIG
http://forum.prisonplanet.com/index.php?board=334.0
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

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A Program of Financial Concentration: Was the Bailout Itself a Scam?
http://www.prisonplanet.com/a-program-of-financial-concentration-was-the-bailout-itself-a-scam.html
Paul Craig Roberts
Prison Planet.com
Thursday, March 19, 2009

Professor Michael Hudson (CounterPunch, March 18) is correct that the orchestrated outrage over the $165 million AIG bonuses is a diversion from the thousand times greater theft from taxpayers of the approximately $200 billion “bailout” of AIG. Nevertheless, it is a diversion that serves an important purpose. It has taught an inattentive American public that the elites run the government in their own private interests.

Americans are angry that AIG executives are paying themselves millions of dollars in bonuses after having cost the taxpayers an exorbitant sum. Senator Charles Grassley put a proper face on the anger when he suggested that the AIG executives “follow the Japanese example and resign or go commit suicide.”

Yet, Obama’s White House economist, Larry Summers, on whose watch as Treasury Secretary in the Clinton administration financial deregulation got out of control, invoked the “sanctity of contracts” in defense of the AIG bonuses.

But the Obama administration does not regard other contracts as sacred. Specifically: labor unions had to agree to give-backs in order for the auto companies to obtain federal help; CNN reports that “Veterans Affairs Secretary Eric Shinseki confirmed Tuesday [March 10] that the Obama administration is considering a controversial plan to make veterans pay for treatment of service-related injuries with private insurance”; the Washington Post reports that the Obama team has set its sights on downsizing Social Security and Medicare.

According to the Post, Obama said that “it is impossible to separate the country’s financial ills from the long-term need to rein in health-care costs, stabilize Social Security and prevent the Medicare program from bankrupting the government.”

After Washington’s trillion dollar bank bailouts and trillion dollar gratuitous wars for the sake of the military industry’s profits and Israeli territorial expansion, there is no money for Social Security and Medicare.

The US government breaks its contracts with US citizens on a daily basis, but AIG’s bonus contracts are sacrosanct. The Social Security contract was broken when the government decided to tax 85% of the benefits. It was broken again when the Clinton administration rigged the inflation measure in order to beat retirees out of their cost-of-living adjustments. To have any real Medicare coverage, a person has to give up part of his Social Security check to pay Medicare Part B premium and then take out a private supplemental policy. The true cost of Medicare to beneficiaries is about $6,000 annually in premiums, plus deductibles and the Medicare tax if the person is still earning.

Treasury Secretary Geithner, the fox in charge of the hen house, has resolved the problem for us. He is going to withhold $165 million (the amount of the AIG bonuses) from the next taxpayer payment to AIG of $30,000 million. If someone handed you $30,000 dollars, would you mind if they held back $165?

PR flaks have rechristened the bonus payments “retention payments” necessary if AIG is to retain crucial employees. This lie was shot down by New York Attorney General Andrew Cuomo, who informed the House Committee on Financial Services that the payments went to members of AIG’s Financial Products subsidiary, “the unit of AIG that was principally responsible for the firm’s meltdown.” As for retention, Cuomo pointed out that ”numerous individuals who received large ‘retention’ bonuses are no longer at the firm” .

Eliot Spitzer, the former New York Governor who was set-up in a sex scandal to prevent him investigating Wall Street’s financial gangsterism, pointed out on March 17 that the real scandal is the billions of taxpayer dollars paid to the counter-parties of AIG’s financial deals. These payments, Spitzer writes, are “a way to hide an enormous second round of cash to the same group that had received TARP money already.”

Goldman Sachs, for example, had already received a taxpayer cash infusion of $25 billion and was sitting on more than $100 billion in cash when the Wall Street firm received another $13 billion via the AIG bailout.

Moreover, in my opinion, most of the billions of dollars in AIG counter-party payments were unnecessary. They represent gravy paid to firms that had made risk-free bets, the non-payment of which constituted no threat to financial solvency.

Spitzer identifies a conflict of interest that could possibly be criminal self-dealing. According to reports, the AIG bailout decision involved Bush Treasury Secretary Henry Paulson, formerly of Goldman Sachs, Goldman Sachs CEO Lloyd Blankfein, Fed Chairman Ben Bernanke, and Timothy Geithner, former New York Federal Reserve president and currently Secretary of the Treasury. No doubt the incestuous relationships are the reason the original bailout deal had no oversight or transparency.

The Bush/Obama bailouts require serious investigation. Were these bailouts necessary, or were they a scam, like “weapons of mass destruction,” used to advance a private agenda behind a wall of fear? Recently I heard Harvard Law professor Elizabeth Warren, a member of a congressional bailout oversight panel, say on NPR that the US has far too many banks. Out of the financial crisis, she said, should come consolidation with the financial sector consisting of a few mega-banks. Was the whole point of the bailout to supply taxpayer money for a program of financial concentration?
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Treasury Department admits pushing for bonus loophole
http://rawstory.com/news/2008/Obama_Treasury_Department_pushed_for_language_0319.html
John Byrne
Published: Thursday March 19, 2009


UPDATE (at bottom): TARP inspector says Bush admin. 'specifically contemplated' the AIG bonuses

Update from CNN -- 459PM ET: (CNN) --"Treasury Secretary Timothy Geithner told CNN Thursday his department asked Sen. Chris Dodd to include a loophole in the stimulus bill that allowed bailed-out insurance giant American International Group to keep its bonuses.

"In an interview with CNN's Ali Velshi, Geithner said the Treasury Department was particularly concerned the government would face lawsuits if bonus contracts were breached.

"Dodd admitted to CNN Thursday he'd added the controversial provision after a Treasury official pushed for it. Earlier in the week, Dodd had said he had not played any role in the addition of the loophole.

"Geithner told Velshi Thursday he takes full responsibility for the situation."

Our earlier story follows.
The Obama Administration's Treasury Department pushed to strip language that would have restricted the bonuses paid to staffers of bailed-out companies from the stimulus bill, a Democratic senator revealed late Wednesday.

Senate Banking Committee Chairman Chris Dodd (D-CT) disclosed that he was responsible for inserting a clause into the stimulus bill that allowed bailed-out firms to continue forward with eye-popping bonuses to executives that may have shared responsibility for some of the companies' woes in the first place.

In a step further, though, he told CNN that the language was sought by the Obama Administration's Treasury Department, which feared that the government would face lawsuits by including the provision.

A senior Treasury Department official purportedly confirmed Dodd's assessment. It remains unclear whether the Treasury Department knew the insurance behemoth AIG planned to pay some $165 million in bonuses to employees at the time.

The Connecticut Democrat appears to have gotten caught on the spot by the cable news network. On Tuesday, he told the network that he had nothing to do with the bonus language -- which now seems to have been a lie.

On Wednesday, a Treasury Department official confessed to CNN that the administration had pushed to have the bonus measure nixed, forcing Dodd's hand.

Dodd, when approached again, said the decision not to include language regarding bonuses "seemed like innocent modifications" at the time.

"I agreed reluctantly," Dodd said. "I was changing the amendment because others were insistent."

"The administration had expressed reservations," he added. "They asked for modifications. The alternative was losing the amendment entirely."

He further added that the change was made at the urging of Treasury Department staffers, and that he hadn't been contacted by senior Administration aides.

His account adjoins a report Thursday in the Washington Post, which alleges that neither the White House nor the Treasury Department were told of AIG's bonuses until just before they were publicly announced, though the Federal Reserve had known for months.

The bonuses were doled out to the AIG division at the heart of the company's near collapse and whose intricate dealings with banks worldwide helped trigger the global financial crisis.

Treasury Secretary Timothy Geithner told the Post that he had not been aware of the size of the bonuses and the timing of the payments.

"I was stunned when I learned how bad this was on Tuesday [March 10]," Geithner told the Post. "I shouldn't have been in that position, but it's my responsibility and I accept that."

Geithner met with his staff and considered options, but concluded that the government could not change contracts for work that had already been done.
Update: TARP inspector finds Bush administration 'specifically contemplated' AIG bonuses

According to Bloomberg, "President George W. Bush’s administration 'specifically contemplated' paying bonuses to American International Group Inc. employees in its November agreement to provide federal bailout funds to the insurance giant, the inspector general for the Troubled Asset Relief Program said today."

"The TARP contract between AIG and Treasury 'specifically contemplated the payment of bonuses and retention payments to AIG employees, including AIG’s senior partners,'" the inspector said in the financial news network's article.

The US government owns 80 percent of AIG.

This video is from CNN's American Morning, broadcast Mar. 19, 2009.
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Here is is..................

Who the f**k is the Private Federal Reserve anyway?

Fed knew of AIG bonuses, failed to tell Obama
http://rawstory.com/news/2008/Fed_knew_of_AIG_bonuses_failed_0319.html
Agence France-Presse
Published: Thursday March 19, 2009



WASHINGTON (AFP) -

US Federal Reserve officials knew about the controversial AIG bonuses...
[There is so much wrong with that first part of the first sentence.  They make it seem like this is a US federal agency.  It is not, it is a private bank owned by private people who are burning stacks of $100 bills because then they can continue to implode the economy.  They have done everything to get us into this mess and are now driving their platinum stake into the heart of the American worker.]

but did not tell Treasury or White House officials for months, the Washington Post reported Thursday.

The American International Group informed the Fed three months ago that it would pay 165 million dollars by March 15 to employees in their Financial Products unit, the Post reported, citing government and company officials.

The bonuses were doled out to the AIG division at the heart of the company's near collapse and whose intricate dealings with banks worldwide helped trigger the global financial crisis.

Treasury Secretary Timothy Geithner told the Post that he had not been aware of the size of the bonuses and the timing of the payments.

"I was stunned when I learned how bad this was on Tuesday [March 10]," Geithner told the Post. "I shouldn't have been in that position, but it's my responsibility and I accept that."

Geithner met with his staff and considered options, but concluded that the government could not change contracts for work that had already been done.

Geithner then briefed a senior White House aide, who informed Obama on March 12, the day before they were paid out, the Post reported.

AIG was saved from bankruptcy with an 85-billion-dollar US government lifeline in September, in which Geithner -- then head of the New York Federal Reserve -- was involved. The bailout has since grown to 180 billion dollars.

The US government rescued the insurance giant because it believes that its intricate web of ties with banks worldwide posed an imminent risk of financial collapse not just for the United States but globally.
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Offline Dig

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Commanding The Heights Of Hypocrisy
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/19/AR2009031903039.html
By Michael Gerson
Friday, March 20, 2009; Page A19


The most famous piece of legislation passed by the 111th Congress may have nothing to do with health care or energy. It could be the Dodd amendment, also known as the Geithner amendment, or perhaps the low-level-anonymous-staffer-everyone-can-safely-blame amendment, reading in part:

"The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009 . . . " AIG executives were foolish to use this loophole to "retain" employees, some of whom nearly destroyed the American financial system. But the company did not act with deception or secrecy.

AIG's November SEC filing set out its intention to provide more than $469 million in "retention payments" to employees, eliciting a smattering of congressional protest. Concerns on the broader compensation issue were serious enough to ensure unanimous Senate passage of an amendment to the stimulus bill sponsored by Sens. Olympia Snowe and Ron Wyden that penalized bailout bonuses in excess of $100,000.

But the Snowe-Wyden amendment disappeared into the misty bog of a House-Senate conference committee, only to be trumped by language that grandfathered in AIG's retention bonuses. At first, this seemed to be an example of immaculate legislation -- miraculously fatherless. After explicitly denying responsibility, Senate Banking Committee Chairman Christopher Dodd eventually admitted to including the exception under pressure from the administration. But it doesn't sound like there was much of a fight. Administration input came from unnamed staffers at the Treasury Department, not high-level officials. Dodd said he viewed these as "innocent modifications."

The lack of focus, judgment and competence on the part of Congress and the administration has explanations -- for those dealing in trillions, millions must seem like dirty pennies on the street. But the hollow outrage and blame-shifting from Congress and the administration are inexcusable.

President Obama vowed to "pursue every legal avenue to block these bonuses," when the proper "legal" avenue was to write a responsible law -- a process his own administration apparently undermined. "I'll take responsibility," says the president -- before, in the next few breaths, explaining, "We didn't grant these contracts." And, "We've got a lot on our plate." And, "It's my job to make sure that we fix these messes, even if I don't make them." So Obama seems to be saying: I'll take credit for taking the blame for something that is entirely the fault of others. Positively Clintonian.

"This is an example," thunders Rep. Barney Frank, "of people at the commanding heights of the economy misbehaving, abusing the system" -- which is completely true . . . of the conference committee that reshaped the stimulus bill in secret. Sen. Charles Grassley urged AIG executives to contemplate suicide. This combination of viciousness, shamelessness and cluelessness has consequences. It drains what little political will remains to confront the credit crisis -- an effort that may eventually require spending a trillion dollars or more to help purchase toxic debt. Thanks to AIG, Congress and the administration, Treasury Secretary Timothy Geithner may find his next round of necessary bailouts greeted by a revolt of left and right.

And congressional demagoguery is compromising Geithner's own approach to resolving the credit crisis. Since the direct government purchase of toxic debt would be massively expensive, Geithner has floated the idea of enticing private investors to help buy that debt. The government would give loans or subsidies to mutual funds and hedge funds if they buy toxic securities. But few would make such a risky investment without the hope of large returns.

If those returns are realized, it is easy to imagine how hedge fund managers would be treated when hauled before Congress. "Perhaps the witness can explain to us how he justifies such windfall profits with the people's money? Have you no shame? Give us the names, addresses and phone numbers of every millionaire you enriched at public expense so we can leak them to the press."

What sane money manager would want to partner with a government that blames others for its mistakes, urges the violation of inconvenient contracts and threatens to tax benefits retroactively? One Wall Street expert told me, "Even if people trust the president, they don't trust Congress." This kind of trust and confidence is essential to the next stage of our economic recovery. It is also being actively undermined by the incompetence and hypocrisy of the government itself.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Dig

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Hey look, one of the prime suspects of the 9/11 false flag and the main proponent of the bailout is now the voice of reason on a Viacom show:

Ex-AIG CEO: Don't Blame Me For Bonuses
Hank Greenberg: I Wouldn't Have Paid Them; Current CEO Should Go
http://www.cbsnews.com/stories/2009/03/20/earlyshow/main4878528.shtml?tag=topStory;topStoryHeadline
NEW YORK, March 20, 2009


Maurice "Hank" Greenberg, former CEO of AIG, on The Early Show Friday  (CBS)

Related
Timeline

Bailing Out AIG

Events pertaining to the insurance giant since it began receiving massive amounts of cash from the U.S. government.


Stories
AIG Credit Swapper Under Investigation
House Drops Tax Hammer On Bailout Bonuses


(CBS)  All week, Washington has been hearing and expressing outrage over $165 million in retention bonuses received by employees of American International Group, the insurance giant being kept alive by more than $182 billion in taxpayer bailout money. On Thursday, Early Show co-anchor Maggie Rodriguez sat down with former AIG CEO Maurice "Hank" Greenberg, and talked about those bonuses.


Greenberg built AIG into the largest insurance company in the world. After nearly 40 years at the helm, he was ousted in 2005 in the midst of an accounting scandal. In The Early Show interview, Greenberg said that he doesn’t support retention bonuses and would not have paid the bonuses that have caused a symbolic uproar across the country. He also didn’t accept any responsibility for AIG’s catastrophic meltdown and said that current CEO, Edward Liddy, should be replaced.

The current AIG management countered Greenberg's claims. According to Nicholas Ashooh, senior vice president of communications for AIG, "It's absolutely astounding that Mr. Greenberg would claim that he never put in place retention agreements. His entire long-term management compensation was a retention agreement."

Ashooh goes on to say that Greenberg compensated management in part with awards of AIG stock through Starr International Company, and that, while Greenberg promised repeatedly that the stock was dedicated solely to their compensation, the managers couldn't have it until they retired. Ashooh describes this as a classic retention agreement.

In addition, Greenberg was at the helm of AIG when the Financial Products division was started. This unregulated AIG operation ended up bringing down the company, writing derivatives contracts for foreign and U.S. Banks loaded with mortgage securities, with guarantees of hundred of billions of dollars that had to be paid out when AIG’s credit rating was lowered from AAA to AA.


We had bonuses based on performance. If you didn't perform, you didn't get a bonus.
Maurice "Hank" Greenberg
former CEO of AIG
Read the full interview below.

Rodriguez: If you were still CEO, would you have paid out the bonuses?

Greenberg: Absolutely not.

He says retention bonuses started after he left.

Greenberg: When I was there, nobody had a contract in the company, including me. I didn't believe in them. If you didn't do the job, you didn't deserve to be there. There were no contracts."

Rodriguez: No contracts? No guaranteed bonuses?

Greenberg: No, never. We had bonuses based on performance. If you didn't perform, you didn't get a bonus.

Three CEOs followed Greenberg, but he singles out the current one, Edward Liddy, the government-appointed boss who denied blame this week on Capitol Hill.

Liddy told a congressional hearing, "In reviewing how AIG has been run in prior years, I've also seen evidence of its bad side. Mistakes were made at AIG on a scale few could have ever imagined possible."

Rodriguez: Edward Liddy seemed to imply that a lot of the mistakes at AIG were made when you were CEO."

Greenberg laughed at that.

Rodriguez: Do you accept any responsibility?

Greenberg: Absolutely not. It was the greatest company in history. In the insurance industry, there wasn't anything like it. How does a man who ran a small automobile insurance company, a one-line type of insurance company, ever be on anybody's list to run AIG?

Rodriguez: Are you saying Edward Liddy should be fired?

Greenberg: I think he should be replaced. You can call it what you want.

Rodriguez: You make it sound like a bunch of people who had no grip on reality have been running AIG since you left.

Greenberg: You know, that's a pretty good description.

Rodriguez: Do you think that AIG, the managers at AIG since you left, are guilty of something criminal?

Greenberg: I don't know if it's criminal. I think it's stupidity.

Rodriguez: Should they be punished?

Greenberg: Well, do we punish stupidity? I don't know. ... Those who are investigating should determine whether there was stupidity, there was fraud, there was whatever.

In fact, investigators are looking into whether this man committed fraud: Joseph Casano, appointed by Greenberg to run AIG's financial products, the unit responsible for the losses. Casano has hired a lawyer.

Rodriguez: Do you think he should hire a lawyer?

Greenberg: He probably ought to hire two or three.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Optimus

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Lawmakers took AIG cash, but bash now
http://www.connecttristates.com/news/news_story.aspx?id=276164
By John Bresnahan
Friday, March 20, 2009 at 9:45 a.m.



Joining a chorus of outrage, Rep. John Larson (D-Conn.) took to the floor Thursday to bash American International Group and its million dollar bonuses.

"This is wrong," Larson thundered, right before he voted for a 90 percent tax on the AIG pay outs. "It's time for us to act."

Yet Larson, along with dozens of other lawmakers and senators from both sides of the aisle, was for years a big recipient of campaign contributions from AIG executives and employees while the company was moving down the path toward its financial implosion.

During the last two decades, lawmakers received more than $9.3 million in contributions from AIG and its employees, according to Center for Responsive Politics, a campaign finance watchdog group. While some of the highest profile Democrats, including Banking Chairman Chris Dodd (D-Conn.), top the AIG donor list, the beleaguered company was bipartisan with its campaign largesse.

Larson took in nearly $35,000 in AIG-related donations the last three cycles, according to Federal Election Commission records. Barry Feldman, treasurer of Larson's re-election campaign, said on Thursday evening that the Connecticut Democrat, would donate to charity "the amounts that the campaign has received over the years from the AIG PAC."

GOP Reps. Peter King (R-N.Y.) and Jeb Hensarling (R-Texas), for example, received a combined $14,400 the last two cycles from AIG-related donors.

Of the $2.5 million from AIG over the past three election cycles, 60 percent going to Democrats like Larson, now the Democratic Caucus chairman.

President Obama's campaign was the biggest recipient of AIG-related donations in the 2007-08 cycle, raking in $104,332, according to CRP. Senate Banking Committee Chairman Christopher Dodd (D-Conn.) took in $103,900 during the same period, Sen. John McCain's (R-Ariz.) presidential campaign got $59,499, and former Sen. Hillary Clinton's (D-N.Y.) received nearly $38,000. Senate Finance Committee Max Baucus (D-Mont.) got nearly $25,000, while now Vice President Joe Biden received just under $20,000.

Dodd, however, has generated the most attention for his AIG contributions. Dodd has the leading recipient for AIG donations, taking in nearly $280,000 during his Senate career. While the AIG corporate headquarters are located in New York City, it has extensive operations in the larger metropolitan area, including Connecticut.

Dodd has already stated publicly that he will return some portion of those AIG donations, although it's unclear just how much he is going to give up. "I don't want those contributions," Dodd told the Connecticut Post earlier this week.

Dodd, who is up for re-election in 2010, has come under fire for role in a provision in the stimulus bill that allowed AIG to pay the $165 million in bonuses. Dodd initially denied any role in adding the bonus language to the stimulus package, but then acknowledged he did so at the behest of Obama administration officials.

Larson, for his part, was the top House recipient of AIG largesse in recent years, getting $19,750 from AIG employees in 2007-08, and additional $15,000 in the two previous cycles.

Other Democrats have bashed AIG yet are not considering disgorging any AIG related donations. Schumer has no plans to give up any AIG donations, saying the contributions were old and have nothing to do with the current scandal.

"Virtually all the contributions were made over five years ago, and nothing has been contributed since taxpayers needed to step in to save this company from itself," a Schumer spokesman said.

Some Republicans have attempted to make a political issue of AIG's donations, suggesting lawmakers should jettison them, a practice that has become familiar in recent years for any tainted contributions.

"If I were to find that organizations that were looking to the Treasury to bail out their bad decisions were making contributions to my campaign, I would certainly strongly consider returning those funds," Rep. Mike Pence (R-Ind.) said this week.

Yet Republicans King and Hensarling have no intention of returning the contributions, according to aides to the two lawmakers.

King, in fact, warned during a Wednesday appearance on MSNBC that lawmakers should not "overdo the politics because all of us have to be in this together."

“The Constitution is not an instrument for the government to restrain the people,
it's an instrument for the people to restrain the government.” – Patrick Henry

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Offline TBPauly

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My kudos for posting all this information.  Jaw dropping.  The American people are neck deep in a pile of dung.
"Let justice be done though the heavens fall."
Jim Garrison, c. 1969

Offline stymo1

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The Real AIG Conspiracy

http://www.globalresearch.ca/index.php?context=va&aid=12784

by Prof. Michael Hudson
Global Research, March 18, 2009

It may seem odd, but the public outrage against $135 million in AIG bonuses is a godsend to Wall Street, AID scoundrels included. How can the media be so preoccupied with the discovery that there is self-serving greed to be found in the financial sector? Every TV channel and every newspaper in the country, from right to left, have made these bonuses the lead story over the past two days.

What is wrong with this picture? Is there not something over-inflated about the outrage led most vociferously by Senator Charles Schumer and Rep. Barney Frank, the two leading shills for the bank giveaways over the past year? And does Pres. Obama perhaps find it convenient that finally, at long last, he has been able to criticize something that he believes Wall Street has done wrong? Even the Wall Street Journal has gotten into the act. The government’s takeover of AIG, it pointed out, "uses the firm as a conduit to bail out other institutions." So much more greed is involved than just that of AIG employees. The firm owed much more to other players – abroad as well as on Wall Street – than the assets it had. That is what drove it to insolvency. And popular opposition has been rising to how Mr. Obama and Mr. McCain could have banded together to support the bailout that, in retrospect, amounts to trillions and trillions of dollars thrown "down the drain." Not really down the drain at all, of course – but given to financial speculators on the winning "smart" side of AIG’s bad financial gambles.

"The Washington crowd wants to focus on bonuses because it aims public anger on private actors," it accused in a March 17 editorial. But instead of explaining that the shift is away from Wall Street grabbers of a thousand times the amount of bonuses being contested, it blames its usual all-purpose bete noire: Congress. Where the right and left differ is just whom the public should be directing its anger at!

Here’s the problem with all the hoopla over the $135 million in AIG bonuses: This sum is only less than 0.1% – one thousandth – of the $183 BILLION that the U.S. Treasury gave to AIG as a "pass-through" to its counterparties. This sum, over a thousand times the magnitude of the bonuses on which public attention is conveniently being focused by Wall Street promoters, did not stay with AIG. For over six months, the public media and Congressmen have been trying to find out just where this money DID go. Bloomberg brought a lawsuit to find out. Only to be met with a wall of silence.

Until finally, on Sunday night, March 15, the government finally released the details. They were indeed highly embarrassing. The largest recipient turned out to be just what earlier financial reporters had said was rumored: Mr. Paulson’s own firm, Goldman Sachs, headed the list. It was owed $13 billion in counterparty claims. So here’s the picture that’s emerging. Last September, Treasury Secretary Paulson, from Goldman Sachs, drew up a terse 3-page memo outlining his bailout proposal. The plan specified that whatever he and other Treasury officials did (thus including his subordinates, also from Goldman Sachs), could not be challenged legally or undone, much less prosecuted. This condition enraged Congress, which rejected the bailout in its first incarnation.

It now looks as if Mr. Paulson had good reason to put in a fatal legal clause blocking any clawback of funds given by the Treasury to AIG’s counterparties. This is where public outrage should be focused.

Instead, the leading Congressional shepherds of the bailout legislation – along with Mr. Obama, who came out in his final, Friday night presidential debate with Sen. McCain strongly in favor of the bailout in Mr. Paulson’s awful "short" version – have been posing as conspicuously as possible for the media to cover a deflected target – the AIG executives receiving bonuses, not the company’s counterparties.

There are two questions that one always must ask when a political operation is being launched. First, qui bono? Who benefits? And second, why now? In my experience, timing almost always is the key to figuring out the dynamics at work.

Regarding qui bono, what does Sen. Schumer, Rep. Frank, Pres. Obama and other Wall Street sponsors gain from this public outcry? For starters, it depicts them as hard taskmasters of the banking and financial sector, not its lobbyists carrying water for one giveaway after another. So the AIG kafuffle has muddied the water about where their political loyalties really lie. It enables them to strike a misleading pose – and hence to pose as "honest brokers" next time they dishonestly give away the next few trillion dollars to their major sponsors and campaign contributors.

Regarding the timing, I think I have answered that above. Talking about AIG bonuses has effectively distracted attention from the AIG counterparties who received the $183 billion in Treasury giveaways. The "final" sum to be given to its counterparties has been rumored to be $250 billion, do Sen. Schumer, Rep. Frank and Pres. Obama still have a lot more work to do for Wall Street in the coming year or so.

To succeed in this work – while mitigating the public outrage already rising against the bad bailouts – they need to strike precisely the pose that they’re striking now. It is an exercise in deception.

The moral should be: The wetter the crocodile tears shed over giving bonuses to AIG individuals (who seem to be largely on the healthy, bona fide insurance side of AIG’s business, not its hedge-fund Ponzi-scheme racket), the more they will distract public attention from the $180 billion giveaway, and the better they can position themselves to give away yet more government money (Treasury bonds and Federal Reserve deposits) to their favorite financial charities.
" It's called the American Dream because you have to be asleep to believe it." -- George Carlin

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Offline Elvis

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #100 on: March 20, 2009, 06:27:12 pm »
9.7 trillion -135 million = only $9,698,650,000,000 left to be accounted for. Good thing they're accountants.

This is where the "throwing each other under the bus" part comes in.
"A great civilization is not conquered from without until it has destroyed itself from within." - Will Durant

Offline barndoor77

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #101 on: March 21, 2009, 06:16:20 am »
They can do whatever you want but paper never crates wealth, only people can create wealth through work, or through automation.

But for some reason we are about to allow paper schemes to destroy wealth creation, and sure enough poverty will sprout forth like dandelions on your front yard...

Offline Dig

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #102 on: March 21, 2009, 06:58:50 am »
They can do whatever you want but paper never crates wealth, only people can create wealth through work, or through automation.

But for some reason we are about to allow paper schemes to destroy wealth creation, and sure enough poverty will sprout forth like dandelions on your front yard...

paper destroys wealth and then the mandatory national service laws are used as collateral against the wealth destroying paper.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline winthorp

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #103 on: March 22, 2009, 01:53:49 pm »
This almost sounds like an infomercial...

The government owns a company that will pay YOU tons of money if you ACT now!
My people are destroyed for lack of knowledge - Hosea 4:6

Offline cardio

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #104 on: March 22, 2009, 02:18:25 pm »
165 million is peanuts compared to the 9 trillion.   Seriously 9 trillion is like many countries' total wealth.

Offline Dig

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #105 on: March 22, 2009, 02:24:35 pm »
165 million is peanuts compared to the 9 trillion.   Seriously 9 trillion is like many countries' total wealth.

I said it before it is like giving someone $100.00 and then punching his cousin in the face because he got one penny of that money.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Revolt426

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #106 on: March 22, 2009, 03:17:33 pm »
Paper destroys wealth if it is printed and given to banks to do what they please.

If paper, or as i like to call it , CURRENCY, is invested into physical infrastructure it has something far more valuable then Gold attached to it, that would be Physical Labour and infrastructure that spurs the private sector. For instance, the Tennesse Valley Authority!, providing infrastructure in the form of power plants to rural farm areas to allow agrigation and spur growth. This is a far better idea , opposed to lending privately issued currency to insolvent commercial banks, then praying they go ahead and rebuild the country.

Therefor it is not paper currency that is the problem, the problem is the way it is issued (Mathimatically as opposed to Scientifically) and the fact that it is privately issued and not representative of a Soveriegn nations credit.

So , a terrific idea would be to put the FED into bankruptcy, wipe all derivatives out and Nationalize the FED as a part of the Treasury to monetize credit issued by the Treasury and appropriated by Congress, and invest it into something productive rather then handing it to the private sector so they can pay off their gambling debts.
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate … It will purge the rottenness out of the system..." - Andrew Mellon, Secretary of Treasury, 1929.

Offline Dig

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #107 on: March 22, 2009, 05:23:00 pm »
Paper destroys wealth if it is printed and given to banks to do what they please.

If paper, or as i like to call it , CURRENCY, is invested into physical infrastructure it has something far more valuable then Gold attached to it, that would be Physical Labour and infrastructure that spurs the private sector. For instance, the Tennesse Valley Authority!, providing infrastructure in the form of power plants to rural farm areas to allow agrigation and spur growth. This is a far better idea , opposed to lending privately issued currency to insolvent commercial banks, then praying they go ahead and rebuild the country.

Therefor it is not paper currency that is the problem, the problem is the way it is issued (Mathimatically as opposed to Scientifically) and the fact that it is privately issued and not representative of a Soveriegn nations credit.

So , a terrific idea would be to put the FED into bankruptcy, wipe all derivatives out and Nationalize the FED as a part of the Treasury to monetize credit issued by the Treasury and appropriated by Congress, and invest it into something productive rather then handing it to the private sector so they can pay off their gambling debts.

if we do not expose the fed soon, it will continue to expose us to predictable failure.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Revolt426

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #108 on: March 22, 2009, 05:29:46 pm »
if we do not expose the fed soon, it will continue to expose us to predictable failure.
The FED has already been exposed my friend. People are already beginning to get pitchforks and torches ready, as soon as hyperinflation hits from Bernanke's London Advised and complimented "Quantative Easing" aka HYPERINFLATION by printing dollars and funneling them into banks so they can "Ease" the Derivative issue, i personally believe you will begin to see very large public protests.

People are really getting angry and unfortunately the anger may be channeled into violent rebellion instead of peaceful civil disobedience, which may result in marshal law.

That is what scares me.
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate … It will purge the rottenness out of the system..." - Andrew Mellon, Secretary of Treasury, 1929.

Offline Dig

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #109 on: March 22, 2009, 06:47:08 pm »
The FED has already been exposed my friend. People are already beginning to get pitchforks and torches ready, as soon as hyperinflation hits from Bernanke's London Advised and complimented "Quantative Easing" aka HYPERINFLATION by printing dollars and funneling them into banks so they can "Ease" the Derivative issue, i personally believe you will begin to see very large public protests.

People are really getting angry and unfortunately the anger may be channeled into violent rebellion instead of peaceful civil disobedience, which may result in marshal law.

That is what scares me.

The plan is for violence and it will not be the American people (they are not to be trusted by the elites).  They will use controlled provocateurs like they always do or they will just make shit up.  They sentenced one guy doe like 20 years for making molotov cocktails at the RNC.  Did you see the armoured vehicles, spy blimps, tear gas, SWAT gear, etc?

It was like using a stick against a tank, total f-ing bullshit. And making a molotov cocktail?  walk into a bar and put a necktie in a bottle or rum, then you get 20 years hard time in federal "I own your ass" prison. So yeah people don't be patsied into stupid shit, but these guys have already planned to attack peaceful protesters by any means necessary and the best thing to do it be prepared to document anything out of the ordinary and protestor/undercover cops (usually with masks) doing anything out of the ordinary.

All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline Dig

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #110 on: March 24, 2009, 10:10:48 am »
AIG's Bonus Unit Now in IRS's Sights
http://online.wsj.com/article/SB123785925883921027.html
By JESSE DRUCKER in New York and CARRICK MOLLENKAMP in London

Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business.

The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses.

The company paid $61 million last year in disputed taxes stemming from the deals but sued the U.S. government last month in federal court in New York, seeking a refund, according to filings in the case.

Banks that worked with AIG on tax deals include Crédit Agricole SA of France, Bank of Ireland and Bank of America Corp., according to AIG's lawsuit. The banks declined to comment.

In general, AIG's tax deals permitted U.S. companies and foreign banks to effectively claim credit in their home country for a single tax payment, partly through the use of an offshore AIG subsidiary. In its lawsuit against the government, the insurer said it was told by the IRS that AIG hadn't shown that the transactions "had sufficient economic substance and business purpose" to justify tax benefits. The IRS declined to comment.

The tax-structuring operation started by AIG in the 1990s was even bigger than AIG's credit-default-swaps business, according to a person familiar with the matter.

An AIG spokesman declined to discuss the tax-cutting transactions in detail but asserted that the tax benefits were proper and justified. AIG wants to "ensure that it is not required to pay more than its fair share of taxes," a company spokeswoman said.
More
AIG Workers to Return $50 Million of Bonuses
Soros: Credit Default Swaps Need Stricter Regulation


Defenders of these arrangements say that taking advantage of differences between tax laws in the U.S. and overseas is simply smart business, arguing that the deals weren't explicitly prohibited by IRS regulations at the time.

New versions of these foreign-tax-credit deals effectively stopped in 2007 after the IRS proposed regulations to end them. The agency has formed a special team of agents and attorneys to examine such transactions. AIG wound down its tax unit last year following the proposed regulations.

Cross-border tax transactions are drawing increased scrutiny from U.S. and European tax officials, who are seeking to limit deals that help firms to play one nation's tax laws against another. This month, U.K. tax authorities said they were reviewing documents that show how Barclays PLC structured offshore deals for clients.

Last week, IRS Commissioner Douglas Shulman told the Senate Finance Committee that the agency is "aggressively pursuing" so-called "foreign tax-credit generators." Those are the sort of deals that the IRS is challenging at AIG, court records in two cases show.

Mr. Shulman didn't identify specific companies, though such a transaction "really perverts the foreign tax credit," he said.

The foreign-tax-credit transactions took numerous forms. In one version, an offshore AIG subsidiary would borrow money from an overseas bank and also earn investment income overseas. The AIG unit would pay foreign taxes on that investment income and earn a foreign tax credit in the U.S., according to court records involving companies using these deals that have been challenged by the IRS and people who have worked on such deals.

Another AIG unit would then pay interest to the foreign bank, deducting those payments from its U.S. taxes. Meanwhile, the foreign bank was exempt from tax on that interest because overseas tax authorities treated the bank as simultaneously owning the AIG subsidiary. That effectively gave the foreign bank credit for taxes paid by the AIG subsidiary.

Because the foreign bank got a tax exemption overseas, it could charge lower interest costs on the cash loaned to AIG, according to people familiar with the transactions.

AIG helped set up a complex transaction for France's Crédit Agricole in the late 1990s that generated roughly $17.8 million in tax savings for AIG and unspecified tax savings for Crédit Agricole, according to court filings by AIG in its suit against the IRS. The bank declined to comment.

Last year, Crédit Agricole's Calyon investment-banking unit got $3.3 billion in payouts as part of the U.S. government's rescue of AIG.

"If people are going to get taxpayer money, then there definitely should be a measure of corporate social responsibility, to put it bluntly," said Reuven S. Avi-Yonah, a former corporate tax attorney who is director of the international tax program at the University of Michigan's law school.

Barclays, which recently got $8.5 billion from AIG, also used the insurer's financial-products unit, according to a person familiar with the matter. Other AIG tax-cutting clients included Banca Commerciale Italiana SpA, now part of Intesa Sanpaolo, according to a court filing by AIG. The banks, which declined to comment, took part in low-cost financing deals with subsidiaries of AIG that provided tax benefits to both parties.

Bank of America worked with AIG on at least one tax structure, according to the AIG lawsuit filed last month. The Charlotte, N.C., bank also did a sizable business selling such deals, according to a person familiar with the situation.


A key force in the AIG tax unit was David Ackert, a former lawyer at Sullivan & Cromwell LLP and banker at Goldman Sachs Group Inc., say four people familiar with the business. While at Goldman, Mr. Ackert helped devise a tax shelter for drug giant Merck & Co. that was eventually part of a $2.3 billion IRS settlement in 2007. That was one of the largest publicly disclosed tax resolutions in U.S. history. Mr. Ackert and Goldman weren't accused of any wrongdoing.

In 1994, Mr. Ackert joined AIG and became a lieutenant to Joseph Cassano, the former head of AIG FP. In May 2007, Mr. Cassano told AIG investors that the tax business had been "a very, very successful component of our business." At least one of the transactions being challenged by the IRS came before Mr. Ackert's arrival at AIG.

Mr. Ackert, who retired in 2007, didn't work on the AIG transactions currently being challenged by the IRS, according to a person familiar with the matter.

In its complaint against the U.S., AIG details a transaction with Crédit Agricole, which provided three billion French francs (roughly $520 million) in "low-cost financing" to an AIG subsidiary for title to a newly created French entity. That entity paid French corporate income taxes, generating a foreign tax credit for AIG.

Last year, the IRS disallowed AIG's claim for the foreign tax credit based on taxes paid as part of the Crédit Agricole deal. In a securities filing, AIG said it expects the IRS to challenge tax benefits from several other transactions.

AIG worked with Barclays to form a tax venture called Pyrus Investments Ltd., according to documents and a person familiar with the situation. The unit allowed both companies to claim joint tax credits for one tax payment.

According to Pyrus corporate filings in the U.K., Pyrus has no employees. Its directors have included Mr. Cassano, the former AIG executive, and members of a tax-structuring team at Barclays Capital, a Barclays unit, according to corporate filings.

People familiar with the structure said the Pyrus venture ended in January 2008. A Barclays spokesman declined to comment on the AIG transactions.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #111 on: March 24, 2009, 10:11:24 am »
Obama Administration seeks to give Treasury Secretary power to seize more companies
http://rawstory.com/news/2008/Obama_Administration_seeks_to_give_Treasury_0324.html
John Byrne Published: Tuesday March 24, 2009


President Barack Obama is considering asking Congress to give Treasury Secretary Timothy Geithner the power to seize non-bank financial companies -- such as insurers or hedge funds -- according to a report in Tuesday's Washington Post.

The measure, Administration officials hope, will allow the government to forestall an economic domino effect, such as was caused by the failure of the investment house Lehman Brothers last year.

The Post's story is based on an "administration document," which was not printed.

"Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process," the Post's Binyamin Appelbaum and David Cho wrote. "The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document."

Meanwhile, a senior Democratic lawmaker told Reuters on Tuesday that he was willing to give Treasury Secretary Geithner more authority to oversee the unwinding of financial institutions that are not now federally regulated.

U.S. Rep. Paul Kanjorski, chairman of a House Financial Services subcommittee, said Geithner would be asking for additional authority to oversee organizations like giant insurer American International Group.

Kanjorski said he would work with the Obama administration to give the Treasury Department the additional authority to handle such institutions "if there is a systemic problem involved.

Legislation to allow Geithner expanded powers could go to Congress as soon as this week.

"The powers would parallel the government's existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp," Appelbaum and Cho wrote. "Geithner has cited that structure as the model for the government's plans."
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

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Re: AIG: Private Federal Reserve using outrage to overturn the constitution!
« Reply #112 on: March 24, 2009, 10:11:55 am »
Geithner, Bernanke testify on AIG, banking crisis
http://www.rawstory.com/news/2008/Geithner_Bernake_testify_on_AIG_banking_0324.html
RAW STORY
Published: Tuesday March 24, 2009



During a Tuesday hearing of the House Financial Services Committee, Treasury Secretary Tim Geithner asked lawmakers to give him new regulatory powers to deal with the country's massive financial crisis.

The Treasury Secretary asked for powers similar to those of the Federal Deposit Insurance Corporation, which can seize control of banks, take over their bad assets and sell the good ones to competitors.

Geithner, who in the eyes of much of the public, has struggled to an extent to find his footing in dealing with the massive financial crisis, asked Congress to give him even more power to take control of a troubled financial institution and run it, after consultation with the Federal Reserve. The treasury chief is an official of the administration, unlike the FDIC, which is an independent regulatory agency.

Geithner said he didn't learn of the controversial AIG bonuses until March 10. At that time Geithner said he asked AIG CEO Edward Liddy to re-negotiate the payments but was informed that they were legally binding.

Federal Reserve Chairman Ben Bernanke said he originally wanted to sue AIG for the millions in executive bonuses but was talked out of it by his legal staff.

According to a report from Bloomberg, New York Fed President William Dudley speaking at the hearing said, “We did not think it was legally permissible" to overrule AIG’s decision to pay bonuses.

Bernanke seemed to support Geithner's call for more regulatory power, noting that if the government had had more power to take control of financial institutions in September, the way the FDIC has the authority to take control of failing banks, the government "could have taken haircuts against some of the counterparties without out taking a default."

Committee Chairman Barney Frank interrupted testimony at several points to chastise protesters attending the hearing for their disruptions.

"I do not know how you think you advance any cause to which you might be attached with this kind of silliness," Frank said to the protesters.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

Offline TahoeBlue

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Bump  - mentioned on show today - NY Fed manipulation
Quote
For good measure, there's also something called a Money Market Investor Funding Facility, plus three facilities called Maiden Lane I, II and III to aid bailout recipients like Bear Stearns and AIG.
Behold, happy is the man whom God correcteth: therefore despise not thou the chastening of the Almighty: For he maketh sore, and bindeth up: he woundeth, and his hands make whole ; He shall deliver thee in six troubles: yea, in seven there shall no evil touch thee. - Job 5