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AIG Goes For Re-Broke, Offers To Repurchase Toxic Subprime Portfolio From Fed For $15.7 Billion
When a bankrupt zombie company offers to purchase from the Fed the very instruments that put it in bankruptcy in the first place, and which the Fed was forced to put on US taxpayers in order to perpetuate the status quo farce, you know the words Banana republic don't even start to begin to express the describe the lunacy we live in.
From Reuters:
- Submits offer to buy all of rmbs owned by Maiden lane II for $15.7 billion
in
cash
If accepted, this offer will substantially reduce the amount of
outstanding
government assistance to AIG
- If accepted, offer will guarantee frbny earns a profit on its interest in
Maiden lane II
- Says total outstanding assistance from U.S. government will be reduced by
about $13 billion to total of about $26 billion
- Says conditions that necessitated Maiden lane II have been resolved
- Aig's outstanding assistance from the U.S. government totals approximately
$39 billion - Says is offering to purchase all of the approximately 800 rmbs owned by
Maiden lane II in a single transaction - Anticipates more than 98 percent of Maiden lane II securities will be
classified as naic 1 securities by regulators - Says does not expect the transaction to have a material effect on its
ratings - Says set aside the cash necessary to pay the purchase price in full
Incidentally, $15.7 billion is below the value the Fed has Maiden Lane II marked at as of today, which is $15.9 billion. We are confident that this will not prevent the Fed from doing everything in its power to bend over to the nationalized insurer's demands.
And yes, Maiden Lane was created by the Fed to front the insolvent AIG cash back in 2008, and purchase AIG's own toxic paper. To wit:
Purpose: ML II LLC was created to alleviate capital
and liquidity pressures on American International Group Inc. (AIG)
stemming from its securities lending program by purchasing $20.5 billion
in residential mortgage-backed securities (RMBS) from several of AIG’s
U.S. insurance subsidiaries.
Terms: The New York Fed lent ML II LLC
approximately $19.5 billion. The loan has a 6-year term and accrues
interest at 1-month LIBOR plus 100 basis points. The AIG insurance
subsidiaries agreed to defer receipt of $1 billion of the purchase
price. The fixed deferred purchase price accrues at 1-month LIBOR plus
300 basis points.
Investment Objective: Maximize the long-term
cashflows of the portfolio to repay the New York Fed’s senior loan
(including principal, interest, and residual), while refraining from
disturbing general financial market conditions. Monthly loan repayment
commenced in January 2009.
»
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BTFD
Toxic is the new GLD.
It's only plated in toxic, there is gold underneath. These guys know their stuff, trust them.
Exactly. The $45 warrants (exp 2021) look like a decent play - and one could sell some Jan 13 calls against them which carry almost double the implied volatility..
things are getting even more interesting. like find the ball under the 3 cup game except, here we have many cups. (and the "powers that be" have no balls to deal honestly)
Can/will proceeds be POMOd? If so, almost a week's worth, so FRBNY may be buying ahead.
This reminds me of a dog eating its own vomit.
I sort of see an Escher tapeworm myself.
Well played.
brilliant.
+1 Michelangelo
if they owe the US government 39 billion, how are they allowed to 'buy' anything 'til they pay back what they owe?
Money laundering is an endorsed and approved program under the emergency powers act.
Christ; I feel like I'm living in a giant mental asylum.
Nurse Ratched says, "take your pills."
And the inmates are running the asylum.
Yes, and the inmates are running it.
...when performed by players in the circle.
Ah HA HA HA HA HA!
Stop it, my sides are huuurrting.
Ah HA HA HA HA HA!
Or is that my ass?
They're, coming to take me away, ha, ha,
They're, coming to take me away, ho, ho,
He, he, ha, ha,
To the funny farm where life is beautiful all the time with chirping birds and...
New reality TV show tonight at 8:00 pm:
Extreme Dissonance
http://techtownwsu.org/wp-content/uploads/2011/02/edvard-munch-the-screa...
Are you finally going over the edge, Missy? You're a hoot.
I can't wait for the smoke to clear on this deal to see how badly the average U. S. citizen has again been screwed by the FIRE sector. This cannot turn out well.
the fed's balance sheet may actually contract
There are lots of rug out there used to sweep the dead roaches under.
Everything is going to look very peachy in about 6 months.
just another signal that QE3 will be delayed. there will be a smash down of equities/commodities and asset deflation 9get this shit off of the FBNY's balance sheet now, let AIG take the hit, again). the temporary rush into treasuries will give the Treserve enough time before the people realize that the economy is still shit and the bureaucrats start demanding that Bernanke saves us yet again. i'm anticipating the epic BTFD opportunity though.
EXACTLY - screw QE3 they will blow up AIG again and maybe 1 TBTF bank and do TARP II, this time it will be for a few trillion
benmouche and the ny fed screwing the goyim again.
Oy Vey ! On it goes, already.
I could have said "joo york fed" but that would have been redundant.
Allow me to quote the Bard:
ALL:
Double, double toil and trouble;
Fire burn, and caldron bubble.
3rd WITCH:
Scale of dragon; tooth of wolf;
Witches' mummy; maw and gulf
Of the ravin'd salt-sea shark;
Root of hemlock digg'd i the dark;
Liver of blaspheming Jew;
Gall of goat, and slips of yew
Is that offer at fair value, market value, made up value and paid in pixie dust?
Ass wiping value. It's fiat, does it matter what we call it? Does the number of them matter any more? It is all fiction. At least a good dose of pixie dust might be worth something though...
Nahhh
It's Pixeldust
Good editing, I missed that.
Ooo...Pixeldust FTW!
If the bonds are worth so much, then why not bid them back out to market instead of allowing AIG to no bid them?
ding ding ding ding!
It is obvious to me that the $15.7B price is WAY ABOVE what the securities are worth on the open market. Only a government owned company would fork over that kind of taxpayer dough and say that it was a good deal.
"hey, Tarp I was paid back...We even made money on the deal!"
-John Q. Public
Ponzi + 3 card monte= win/win
Anyone care to explain the rationale behind this move ?
Sure. This is just the first step. Next AIG will "buy" the toxic assets of the TBTF banks and then they'll declare bankruptcy. Problem solved.
Wasn't this an episode of South Park ?
You got it. Fed holding a fucking bomb in their lap and they see the timer down to 00:05...time to hand it back to someone they won't feel bad about blowing up.
Not a bad idea... put together all the toxic assets into one company and then play titanic....
It has to do with exceutive bonuses. Look busy.
hahahahaha! one of the better one-liners here.....
Best guess is it's a gesture move to shrink the Fed portfolio.....even though $15b is a relatively short piss in the ocean. Could be a reverse screwing too.....the $15.9b Fed valuation might really be $9b FV. Who really knows which is the fly and the spider in this tangled web but the Berank ?
Yeah. I think. Public relations; it's all part of the emotional tone picture; the warm and fuzzy feeling of the new recovery; also, commish. fees. etc. "A little slice offa the top, for you, eh. Benny". etc.
Yatszeeeee! Complete PR prank designed to deflect attention away from the 200+ point shitbomb the Dow laid today.
Will work on some; won't matter long term.
We're fucking doomed.
"Says conditions that necessitated Maiden lane II have been resolved"
yes - low bonuses in 2008 were rectified with taxpayer money and low levels of control of the country by banksters have been increased dramatically...
and most importantly, the criminal, corrupt, and incompetent management of aig was allowed to survive in order to lumber on to another catastrophe....
Learn about why all of this is really going on. There international bankers will stop at nothing, as foretold by Aaron Russo who was in contact with the Rockefellers before passing. He denied becoming a member of the elite, as he wished to help the people of the world. Please give his work the respect it deserves.
http://thehardrightedge.com/aaronrusso/
That company should not even exist.
Anyone connected to it should be bankrupt.
And yet, we live in a societe where jackals such as this prosper.
This story wants me to fucking torch their buildings tomorrow. Fucking leeches.
Lesson: Having deep and intimate ties to the CIA ensures survival.
200 years ago, the British forced the Chinese to accept their drugs. Who do the CIA sell to?
Where did it all go wrong?
That is the line they should be using at their collage career events!
They (AIG/bankers) are thinking who gives a shit... we have a nation full of patriots waiting to give us the rest of their welfare checks, happily I might add and won't even say well why do you want me to bail you out again? Just don't take my LCD or foreign luxury ride!
It's not "they (aig bankers) like they're anonymous
it's "Hank" (or is that really Chaim?) the joooooo Greenberg
Yes, we've been trodding on the winepress much too long:
Rebel, rebel!
Babylon system is the vampire, yea! (vampire)
Suckin' the children day by day, yeah!
Me say: de Babylon system is the vampire, falling empire,
Suckin' the blood of the sufferers, yea-ea-ea-ea-e-ah!
Building church and university, wo-o-ooh, yeah! -
Deceiving the people continually, yea-ea!
Me say them graduatin' thieves and murderers;
Look out now: they suckin' the blood of the sufferers (sufferers).
Yea-ea-ea! (sufferers)
Tell the children the truth;
Tell the children the truth;
Tell the children the truth right now!
Come on and tell the children the truth;
Tell the children the truth;
Tell the children the truth;
Tell the children the truth;
Come on and tell the children the truth.
'Cause - 'cause we've been trodding on ya winepress much too long:
Rebel, rebel!
And we've been taken for granted much too long:
Rebel, rebel now!
Excerpt from "Babylon System" by one of my favorite artists of all time.
He knew
Whatever happened to the original Maiden Lane I where the Fed bought/guaranteed $29B of Bear-Stearns assets for JPMorgan?
ML 1 Currently worth around 25B$ mark to magical thinking
10B$ mark to model (Giselle)
1.232 B$ mark to market, if there was a market (translation: fuckin worthless)
Does this 30 Billion in FunBucks stay with JP longTime?
It's a fucking scam. The FRB is partially owned by JPM. The outstanding debts could be $500tn, and the FRB would still guarantee it for JPM.
Central banking in the states has NOTHING to do with lender of last resort. It's all got to do with bailouts for the majors when things go horribly wrong. The exceptional interactions NEVER benefit the populace. Why do you think the FRB was established under extreme secrecy?
Just had to repost this (keep in mind the SAME INDUSTRIALISTS behind Hitler run the USA):
by Franken_Stein
on Thu, 03/10/2011 - 14:35
#1037473
Weimar Republic in the 1920s.
http://www.youtube.com/watch?v=IoXCvwVO1J4&feature=related
Which led to the rise of Adolf Hitler.
reply flag as junk (0)
by Franken_Stein
on Thu, 03/10/2011 - 15:00
#1037607
At the end of the video they talk about:
"All useless spending to be cut."
Compare this to the current situation in the U.S.
The banksters were pigs back then, when they starved the German population to death, and the bankers are pigs now.
They want to starve the U.S. population to death.
The parallels of the current U.S. to 1920s Weimar Republic are striking beyond belief.
reply flag as junk (0)
Hitler was financed substantially by IG Farben, who used concentration labour - even built a labour plant next to Auschwitz. If there were any direct connections to US Wall St companies, recorded history have eliminated these. American IG was taken over by American interests due to the "Trading with the Enemy" act.
International Telephone & Telegraph is dubious, but there's no recorded smoking gun.
Anyone here understands the lunacy of it all, as is so well illustrated by this latest AIG fiasco.
What's sad and gives me little hope for this nation is that 99 out of 100 people in the general population wouldn't ever express an interest in or be able to understand the implications of this article.
In other words, Americans are the perfect crime victims: They'll take almost unlimited abuse and raping and pillaging, with little complaining.
That's why you come here: you don't want to be one of those 99 out of 100.
This site is invaluable in understanding why you want to own gold and hard commodities, until the Fed pulls the rug out from under the markets again.
It's the sheep who blindly plow their money into 401ks, or worse yet, trust their retirement to the CALPERS of the world, who are getting screwed, day in and day out.
I want the Fed & The Bernank to buy toxic shit from me, too.
I will go and collect the most toxic of assets and trash, and sell them to The Bernank, banking a 5000% profit.
What is The Bernank's number?
666...
lol
Nothing will change until people are starving.
There is a solution. Instead of another retread detective, ER, lawyer, whatever, television drama how about a few on some of the professions that are never covered. Banking and brokers. Occam's razor says there is no demand for this type of TV drama thus no programming. Conspiracy's razor on the other hand...
Or maybe a a "Dexter" type show where the bad guys he takes out are the banksta's
There is a solution...
Yep, In the "old" days it was called sackcloth and ashes.
I am forced out of my underground lair in order to provide the obvious explination. Fannie and Freddy are about to be bailed out and new gov backing will be made on MBSes in the near future. The value of existing MBS will go up since they will be backstopped. Shrewed.
Paging WB7 !
"Come, Mista tallyman, tally me Obama . . . "
Good. Set AIG up for another round as a pinata, sure the big boys are ready to bash some candy out. Candy provided care of American Suckers of course. At least by using the same company they can just dust off the old propaganda and run it again. Save on writers, austerity and all.
We should be honored that they still go through the motions of spinning it.
i am putting my Manchester United AIG jersey on ebay .....any bids ?
I'll open the bid at 15.7 frn vapor backed currency markers payable in monthly installments at 100 basis points for the next 7 years. Either that or 150 Mario Brothers gold coins.
If you are selling your shirt I'm selling my AIG Insurance Services "stress ball" made to look like an "8 ball". Big money.
What a joke America is, a horrendous blight on history best to be forgotten. Will this cancer be contained or will it kill the rest of the world also?
I think there is going to be one more round of free money. The Dow will be energized like no ones business. Remember; energy = prosperity. We still have enough to pull off one more mondo ramp. A 7 to 8 year time frame.
Then errbody assume the fetal position, globally.
Right now would be a great time to start an energy trading company. Enron II. You would easily get backing from the MIC.
Hey, I know this game.. it's pass the turd.
I'm wondering if pass ends up being put-back, which will require another TBTF bank bail-out, a turd indeed.
AIG performs services for other government agencies.
no way, we need the interest on the loans (and more) to pay for the tax payer losses.
Let's be polite here. Lying MutherFookers
Tomorrow Goldman Sachs will probably offer to sell it to them (and go short) for $15.6 Billion.
So the Fed bought their toxic waste and then gave them money and that money is whats being used to buy the toxic debt back (which in turn will be bought by the govt. again via some swap). He is right, a banana republic doesn't even start to describe what is going on. When this 60 MPH carousel stops it is going to whip everybody forward into the audience.
NAIC `1' - Assigned to obligations exhibiting the highest quality. Credit risk is at its lowest and the issuer's credit profile is stable.
LOLOLOLOL. It's surreal.
South Park returns the Margaritta machine....to the Fed.
When the next reverse split happens that should put AIG s all-time high at $100,000 per share. Buy that dip
These guys are clowns. They need to get Charlie Sheen running AIG, like yesterday!
[edit] double post.
I would gladly buy that 15.7 billion debt from the FED. Just as soon as the FED lends me the 15.7 billion to buy said debt. My God, does the US government really think that educated Americans are that fucking stupid?????? We are doomed.
In a word -YUP! bendover bumkin its shagging time.
Yehaw I doz like 'em tight and dry, really pulls on the foreskin
This should make AIG go to 100! Declare the recession over, Bernanke the King. And Goldman chief Overlord of all Mankind....
another profitable investment... everything the govt touches turns to gold!
That's it.
I'm starting a Hedge Fund named 'Maiden Lane Trois,' and we'll advertise ourselves as holding assets far more valuable and accurately valued than Maiden Lane II.
Tyler,
Thank you for this article. However, I am surpised you did not anlayze or comment on AIG's cash positon.
AIG had only $1.558 billion USD in cash as of 12/31/10 per its latest 10-K(http://www.aigcorporate.com/investors/2011_February/December_31,_2010_10-K_Final.pdf).
To finance such a $15.7 billion transaction AIG would have to pledge the whole Maiden Lane II portfolio to the FED and borrow the whole amount. This is money laundering pure and simple.
AIG will borrow the money from Timmay, which Timmay will get from The Bernank, which The Bernank will ultimately put off onto you and me.
That's how the game is played. It's like musical chairs. Except your and mine economic future is on the line, and it's our money, and we are 100% guaranteed not to be able to find any seat when the music stops.
It seems the dog has come back to eat its own vomit...
Says conditions that necessitated Maiden lane II have been resolved.....
Fucking kill me now, I can't take this torture any more.
FUCKING INSANE
This is what central planning looks like.
They piss in our face and the MSM tell us it's raining.
I heard that phrase on Judge Judy Shylock's show.
AIG is going to buy all the toxic stuff and then they go broke.
Watch for PM derivatives and shorts to reappear in their books when this happens. This will destroy 50% of the nominal wealth (and 0% of the productive wealth) of the US and the following implosion can be fought bravely by QE3 while Obama may finally claim he "solved" the financial crisis.
Piss. In our faces.
MSM: "It's rain!"
acid rain...AIG guaranteed, Fed collateral, Moody's certified.