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Finally, today Bernanke said on 60 Minutes what I said about 3 weeks ago they were going to be trying to break them up. That's what they should have done in the beginning, instead of just saying they were too big to fail and pouring money into them.
Here is the story from Yahoo News and Reuters that talks about them giving money to Goldman and other banks.
A large portion of the taxpayer money spent to rescue insurer AIG was passed on to Goldman Sachs and several European banks, who were among the major beneficiaries of more than $90 billion in payments in the first three-and-a-half months of the government bailout, AIG disclosed on Sunday.
The revelation was another public relations nightmare, coming on the same weekend that the Obama administration expressed outrage over American International Group Inc's plan to pay massive bonuses to the people in the very division that destroyed the company by issuing billions of dollars in derivatives insuring risky assets.
AIG, an embattled insurance giant that has received federal bailouts totaling $173 billion and is now paying $165 million in employee bonuses, is at the heart of a global financial crisis that President Barack Obama is trying to address with plans for trillions of dollars in spending.
As part of those efforts, Obama will announce steps on Monday to make it easier for small business owners to borrow money, officials said.
But the revelations that billions of U.S. taxpayer dollars were funneled through AIG to Goldman Sachs -- one of Wall Street's most politically connected firms -- and to European banks including Deutsche Bank, France's Societe Generale and the UK's Barclays was likely to stoke further outrage at the entire U.S. bank bailout.
While the payments were not illegal, the fact that billions of dollars given to prop up giant insurer AIG were then transferred to European banks and Wall Street investment houses could raise new doubts about whether the rescue was really economically necessary.
Goldman Sachs, formerly led by Henry Paulson who was treasury secretary at the time of the original AIG bailout, could not immediately be reached for comment. Deutsche Bank and Barclays declined to comment.
The story goes on to describe the plan that Pres. Obama will lay out tomorrow for the small businesses which will help them with the loans they need to proceed. Most of this is from the Recovery Plan that was passed three weeks ago.
AIG also stated today they were going through with the bonuses they planned to pay some of their employees. Treasury Secretary Geithner, Fed Chairman Bernanke and others in the Administration, along with several members of Congress who were on the Sunday shows all expressed outrage with their plan to continue to pay these.
However Edward Liddy, AIG's chairman said failure to pay these bonuses would void the contracts that predated the bailout. After Sec. Geithner called Liddy Wed. and told him it would not be wise to pay the bonuses, Liddy sent a letter back to Pres. Obama and the others to tell them he had no choice.
Summers -- speaking before the payments to banks were made public -- called the AIG bonuses "outrageous" but said contracts must be honored, even though Treasury Secretary Timothy Geithner had "negotiated very forcefully" with AIG and done all that was "legally permissible" to limit the payments.
"We're not a country where contacts just get abrogated willy nilly," Summers, a former treasury secretary, said on CBS's "Face the Nation" program. "What the lesson is, is this: We don't really have a satisfactory regulatory regime in place."
News of the AIG bonuses sparked outrage beyond political circles and was equally apparent on news Web sites and among ordinary Americans.
Now that the story of the payments to the other banks have broken I am sure when Liddy gets to Capitol Hill on Wednesday he will hear about it.
The payments to AIG counterparties include the provision of collateral to back up credit default swaps, a form of financial insurance that AIG's London office was writing, the purchase of the collateralized default obligations, a type of complex debt security that underlay that insurance, and payments to counterparties of a securities lending program.
Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.
The list of counterparties was made public by AIG amid growing pressure on the insurer to come clean about the true beneficiaries of the bailout ahead of a congressional hearing on Wednesday at which AIG chief executive Edward Liddy is slated to testify.
Mostly the Republican talking heads just rattled this morning, but they did say they would have to see what could be done about the contracts and the deals that had been made.
AIG's Liddy said in a letter to Geithner the giant insurer was legally obligated to make 2008 employee retention payments but had agreed to revamp its system for future bonuses after the Obama administration objected.
"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Summers said.
Representative Barney Frank, the Democratic chairman of the powerful House of Representatives Financial Services Committee, said the government must see if the bonuses can be recovered, adding that the timing of AIG's commitment was important.
"We can't just violate law, legal obligations," Frank told Fox. "I understand that. But I do want to find out at what point these illegal obligations were incurred."
Mitch McConnell, the Republican minority leader in the Senate, called the AIG situation an "outrage" and said the nature of the contracts needed to be checked.
"Did they enter into these contracts knowing full well that, as a practical matter, the taxpayers of the United States were going to be reimbursing their employees? Particularly employees who got them into this mess in the first place?" McConnell said on ABC's "This Week."
Let's hope they do something. These idiots just don't understand what is going on in the real world. I think it is time to cut them loose. Either they do without the money from the Government or they do without the bonuses. That would be a very easy decision for me and a lot of others to make.
Where is Sick Rantelli now.. Here, if you ask me is his LOSER!!!!
4 comments:
I am sick to the gills of hearing this "big fat bonuses are industry standard & therefore we must give them to remain competitive & keep the best employees"
#1- If they really had "the best employees" why do they need bailout money??? Huh?
#2- It is NOT industry standard to get billions in bailout, therefore unless or until the bailout money is repaid, no bonuses or other creative way to give out reward money.
#2- If this is standard, then where do I sign up for my million dollar bonus??
I still don't understand if we have to keep the contracts with AIG, why did we (read republitards, ie Bob Croker) have the power to force the Big 3 to renegotiate their contracts and lower wages, get rid of the VIBA, and everything else the Union had with them. Why was this not even brought up yesterday with him or the others??
But, it won't be, because they are part of the problem, not the solution.
AIG needs to change their logo to Horsemen with a bandana covered face & pistols in hand.
This is a new & improved version of the old train bank money heists of the Butch Cassidy & the Sundance kid era.
I'm trying to understand WHY AIG would funnel bailout money to Goldman Sachs when GS could've applied for their own portion of bailout money? Why the two-step side-step maneuver?
Now the European banks I'm pretty sure could not apply for bailout money; I think that was a major bone of contention when Paulson first raged into congress demanding immediate money & congress wanted to make sure we were NOT bailing out foreign banks. So it is double crime for AIG to do what congress specifically prohibited. I wonder if Paulson guided them in this?
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