At A.I.G., Good Luck Following the Money

[Frank Booth]

Now that we live in bailout nation, why does the A.I.G. rescue rub so many the wrong way? Here is a hypothesis: Even as investors, employees, communities and taxpayers have been battered by the crippled financial system, A.I.G.’s counterparties were saved from losses on deals they struck with the insurer.

Add the fact that the government has resisted revealing these companies’ identities or how much federal money they received, and it’s easy to see why resentment boils. As a result of the A.I.G. rescue, taxpayers own almost 80 percent of the company. (Friday evening, as this column was going to press, rumors were swirling that A.I.G. might be releasing a list of all of its counterparties.)

Representative Carolyn B. Maloney, Democrat of New York, said she had twice asked for a full accounting from Ben S. Bernanke, the chairman of the Federal Reserve, which arranged the A.I.G. rescue. She has not received it.

“They have told others it is proprietary information,” Ms. Maloney said in an interview. “But we are the proprietors now. Taxpayers own the store, and we should be able to see the books.”
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When the government stepped in to rescue A.I.G., its main and very reasonable concern was that a collapse of the insurer would drag down with it other big financial companies that were its customers. So the government shoveled taxpayers’ money into A.I.G., beginning with an $85 billion loan last September.

Then the rescuer went mum.

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Even A.I.G.’s own independent directors haven’t been told which of the counterparties were paid, according to a person with direct knowledge of the matter who requested anonymity because of confidentiality agreements.

SUCH secrecy raised hackles because the insurance claims were paid off in full, even though widespread defaults on the underlying debt have not occurred. Why, many people wonder, did the Fed make A.I.G.’s counterparties whole on losses that have not happened yet? Why didn’t it force these financial companies to close out the contracts at a discount, making them take what is known on Wall Street as a “haircut”?

http://www.nytimes.com/2009/03/15/business/15gret.html?_r=1

If the counterparties are ever revealed, I bet we'll discover taxpayers gave a bunch of hedge funds something for nothing. (We already know Goldman Sachs and Merrill Lynch made a bundle on this fleecing.)

[kentuck]

1. They intentionally do not want you to follow the money...

'Cause they are the middleman that hands out the cash to all the banks and investment firms that are up to their eyeballs in the CDS scam.

[Frank Booth]

2. Yep. Just more government sponsored redistribution of wealth,

from the poor and middle class to the super wealthy.