Revealed: See Who Was Paid Off In The AIG Bailout

Ryan Grim and Shahien Nasiripour write on the Huffington Post:

A key question at the heart of the controversial bailout of AIG is just how much money the government lost. The Federal Reserve and Treasury Department have worked to keep that number secret and to conceal who was on the winning end.

An unredacted document obtained by the Huffington Post list the damage in detail. Goldman Sachs alone, for instance, got $14 billion in government money for assets worth $6 billion at the time — a de facto $8 billion subsidy, courtesy of taxpayers.

The list was produced as part of a congressional investigation led by the House Oversight and Government Reform Committee into the federal bailout of AIG.

The Federal Reserve Bank of New York, then led by now-Treasury Secretary Tim Geithner, purchased a slew of souring assets from the world’s biggest banks for 100 cents on the dollar in November and December 2008. A scathing report by a government watchdog held Geithner responsible for the overpayments.

The New York Fed initially pressured AIG to keep the list hidden from investors, regulators and the public. When it was eventually filed with the Securities and Exchange Commission, the SEC allowed the Fed and AIG to keep the details secret. A heavily-redacted version was made public last March.

Read More: Huffington Post

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  • emperorreagan

    I liked during the hearings where Geithner tried to argue that the government had absolutely no leverage in this situation and had to pay out 100%. The only way the government had no leverage in this situation is if the banks were colluding and saying, hey, we'll all fail and take the economy with us if you don't give us 100%.

    Here's the timeline:

    Companies invent risky financial product.

    Ratings agencies with significant conflicts of interest rate garbage financial instruments very highly.

    Government can't be troubled to regulate said financial products, because the financial regulatory system is fragmented and riddled with conflicts of interest (you can't convince me that people bouncing between the financial side and the oversight/regulatory side isn't a massive conflict of interest).

    Financial products inevitably fail, because a thousand tiny slivers of high risk investments can't actually be combined to produce gold bars, no matter how you manipulate the statistics to try to prove they can.

    The government rides in to the rescue. Instead of bailing out the banks directly and transparently, they bail out a company which had underwritten insurance policies on the bad investments in addition to bank bail outs. And not only do they bail out said insurance company, they do so such that the policies are paid out at 100%, instead of forcing some reduced pay out.

    And Geithner seems indignant when congress calls him out? Granted, he's not the only one at fault, but anything other than walking out there and saying, “the fed, treasury, and regulatory community really fucked up” is completely unacceptable. I'm tired of excuses and trying to shift blame and I think a lot of people are, which is why our cowardly representatives are actually willing to tear into Geithner, Bernanke, etc.

  • Anonymous

    These thefts will continue and even get worse, until we the people begin to hang the thieves , just like the Italians did to Mussolini. Soon, I hope….

  • rfw888

    These thefts will continue and even get worse, until we the people begin to hang the thieves , just like the Italians did to Mussolini. Soon, I hope….

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