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Bernanke Yields To Pressure, Welcomes "Full Review" Of AIG, Copies Boilerplate Language From Prior Testimony
Ben Bernanke has yielded to increasing public pressure to finally disclose all the details surrounding the AIG bailout, and in a letter to Acting Comptroller General Gene Dodaro, Bernanke said he would welcome a full review of the AIG taxpayer bailout by the GAO and will make available "all records and personnel necessary to conduct this review," emphasizing that a review should give taxpayers "the most complete understanding of our decisions and actions." One wonders why stop at AIG? Why not open up the Fed to a GAO audit on all bank bailout activities undertaken in the period commencing with the GSE nationalization, and culminating with the Lehman bankruptcy. Surely that would provide an ever more "most complete" understanding of just who got what and how much taxpayer capital was put just so Wall Street could enjoy another record bonus season.
Amusingly, the mea culpa from the letter was lifted verbatim from a prior testimony by the Fed chief.Mr. Berbanke notes: "The Federal Reserve extended this credit to prevent the immediate disorderly failure of the company, an event that likely would have led to a significant intensification of an already severe financial crisis and a further worsening of global economic conditions."
On March 24, 2009, testifying to the Congressional Committee on Financial Services, Ben said:
“....it was well known in the market that many major financial institutions had large exposures to AIG. Its failure would likely have led financial market participants to pull back even more from commercial and investment banks, and those institutions perceived as weaker would have faced escalating pressure. Recall that these events took place before the passage of the Emergency Economic Stabilization Act, which provided funds that the Treasury used to help stem a global banking panic in October. Consequently, it is unlikely that the failure of additional major firms could have been prevented in the wake of the failure of AIG. At best, the consequences of AIG's failure would have been a significant intensification of an already severe financial crisis and a further worsening of global economic conditions. Conceivably, its failure could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs.”
It is good to see that while the Print button at the Federal Reserve is surely working beyond reproach, the Copy-Paste combination is also truly up to snuff. Yet, one wonders, how was the House Committee in March supposed to believe Mr. Bernanke absent all the additional information that has only recently come to light in the subsequent 9 months? And should the general population believe anything that comes out of Fed Chairman's mouth any more without the backing of public evidence supporting each and every claim of the certain "meltdown," going forward. The answer is quite obvious, and is precisely the reason why the Fed will fight to retain its lack of accountability as long as it possibly can.
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The time for talk is over. Abolish the fed.
Thomas Jefferson warned of the damage that would be caused if the people assigned control of the money supply to the banking sector, "I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a money aristocracy that has set the government at defiance. This issuing power should be taken from the banks and restored to the people to whom it properly belongs. If the American people ever allow private banks to control the issue of currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered. I hope we shall crush in its birth the aristocracy of the moneyed corporations which already dare to challenge our Government to a trial of strength and bid defiance to the laws of our country"
--- Thomas Jefferson, 1791
Yep, abolish the FED and have the US Marshalls roundup the bad boys for a perp-walk.
Password: Swordfish.
BS Bernanke wrote a goodbye note, suckas!
"Dear 'Merica, we stole your money. You have no hope of recovering it, as we are using the DoeLars to dry our balls from washing them in gold. Here is the evidence. If you wish to reach us, too bad. Suckas!"
AIG could deflect attention.
Exactly. Distract and extract. More money that is!
Beware of the snake who points fingers.
Are you telling me non of the 3000 employees of the GAO is a goldman alumni?? Give me a break, it's charade don't buy into it.
10 reasons Obama is failing 95 million investors
Commentary: Why his fat-cat bankers are destroying capitalism and democracy
http://www.marketwatch.com/story/10-reasons-why-obama-is-failing-investo...
Awesome, looks like we are at the stage where the criminals start turning on each other.
Game Theory really was a useful class to take in b-school.
The classic game of Problem, Reaction, Solution is being played here.
The Fed chair will be questioned, he will note the causes of what went wrong (everything but himself and the institution he represents) and judging by the reaction he receives to his quips he will offer a solution.
If any real "change" is to come from proceedings like these then the solution must come from someone who did not cause the problem in the first instance.
Such solutions are currently being offered by men such as R- Ron Paul who's bill (http://www.opencongress.org/bill/111-h1207/show), if passed would take a small, but important step toward a real solution.
Funny, doesn't the GAO also supervise the audit the Federal Reserve's Balance sheet?
Y'all believe the GAO can successfully audit this and isn't capable of auditing in any other capacity?
Looks like the mobs anger can easily be self-quelled at times. Oh wait, I just brought up the weak link, get ANGRY AGAIN!!!
7 Lies In Under 2 Minutes
http://tinyurl.com/yj3t4c4
Ya ya and the Book of Life/Akashic Records are COMPLETELY true. There's not one lie in the whole record. Because our leaders and record keepers don't lie.
Does Ben's proffer include the NY Fed and the "stand down" discussions revealed below?
Alas, we've likely been beaten to the punch. With snakes like Bernanke, capitulations of this kind ordinarily come only after the destruction of important evidence. These vermin have every reason not to fear the operation of parliamentary and legal processes because they own them. An entirely different proceedure would be followed if the peoples' interests were being considered, trust me.
Me thinks Timmy is being thrown to the dogs.
Sacrifised by his good Buddy Benny. Divide. Confuse. Distract.
Indeed if the Fed could be trusted to maintain accurate records and the GAO could be trusted to conduct an audit it could work. Unfortunately the institutions of government of the United States or those private organizations that influence and control it cannot be trusted to carry out their responsibilities. So, it matters not what the institutions of government & finance and their leaders and employees do, no one should trust them, even those whose $ are reliant upon them.
Precisely! Taken together, these scum are like some fetid, gelantinous growth in the peoples' innards. After the restoration of democracy, one can expect the arrest, interrogation, and public trial of these swine. Perhaps then we will be treated to the details of the AIG chicanery but not until.
PLEASE PLEASE PLEASE renominate me as Fed chairman. Look, I'll be good, I promise...
The GAO better not drop the ball! Or the 'hammer' will drop on them next!
Best thing the GAO could do is call in a massive FBI forensic financial probe, then start issuing Grand Jury indictments, followed by prosecutions.
The public and "John Doe" along with "Joe Sixpack" will not stand for much less. The message is finally starting to sink in!
What stage are we at, bargaining? Death to teh fed!
It matters not very much what stage we are at when most of society is still in denial....
The Future of Gold & Silver
Bix Weir
OPEN LETTER TO CFTC COMMISSIONERS
January 19, 2010
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581
To the Attention of:
Chairman Gary Gensler
Commissioner Bart Chilton
Commissioner Jill Sommers
Commissioner Michael Dunn
Commissioner Scott O'Malia
Re: The Future of Gold and Silver
Honorable Commissioners:
Instead, Alan Greenspan and friends used their superior computer programming abilities to construct this elaborate scheme for what they thought was for the good of mankind. The extension of the fiat money system facilitated the expansion of the world's infrastructure. Unlimited fiat money was used to build houses, factories, buildings, roads and communication systems throughout the world at a speed that would not have been possible without the steering (manipulating) of global commodity and currency markets. Some say that which has sprung up over the past 40 years is the greatest advancement of global infrastructure in the history of the world and that you should be commended for it.
But was the lie worth it? Yes, magnificent things were constructed but are "things" really what makes the world great? The blowback from your little project also gave the keys of the vault to the villains that have destroyed all the original good intentions. The banking cabal and military industrial complex that you enlisted to "assist" in the master plan took over the reigns of the world wide manipulation which gave them the ultimate power...the power to print money. With that came the power to destroy lives, the power to enrich themselves, the power to rule by force and the power to destroy the US Constitution. Was it all worth it? I guess history will be the judge and the jury on that one.
http://www.roadtoroota.com/public/167print.cfm
I believe the politicians are realizing that you cannot fight the blog people. Sites like ZH provide a place for people, with minimal knowledge about the Fed's policies,to turn to for an explanation that can be understood and they can make the choice as to what is real and what is BS. One of the problems I have had with this site is that I learn things that I really wish I knew nothing about. Even though the posts and comments are both entertaining and informative, some of the stuff going on is just flat depressing. I mean, dang it, does the Fed have to lie about everything?
Anyway, Obama has come to the conclusion you cannot beat bloggers. He has told Bernanke to give it to us straight or else. The world belongs to bloggers and everyone had better get use to the idea.
Timmy Geithner - exit stage left .. you have been thrown off the island.
Anyone who gets to appoint their own auditors (in this case the GAO has Bernoochi's back) is automatically suspect and rightly so.
The people, thru referendum, should TELL him who we want to audit his organization not vice versa.
On sale now:
1,000 Paper shredders, with confetti option, and 1,000 Hard Drive de-magnetizers. Call after 5:00 p.m. Ask for Looey at the Federal Reserve Washington D.C. Tell him Ben sent you.
According to a Wall Street Journal story tonight referencing the AIG sale of ALICO, the FED released 250k pages of docs this evening.
full article:
AIG Deal Holds Payback Hope
By JEFFREY MCCRACKEN, LESLIE SCISM And SERENA NG
Associated Press
The MetLife skyscraper in New York City.
After committing $182.3 billion to prop up insurer American International Group Inc., U.S. taxpayers may finally be getting a chunk of their dollars back.
AIG has in recent weeks been in final negotiations to sell a big international life-insurance unit to rival MetLife Inc., for $14 billion to $15 billion, people familiar with the matter said.
A deal would return $9 billion already earmarked for the Federal Reserve Bank of New York, which largely directed the historic and controversial AIG bailout in September 2008. The rest would go to AIG, which could also use it to reduce its debts to the government, which has an 80% controlling stake in the insurer.
A deal appeared to hearten Obama administration officials, whose AIG strategy—marked by dysfunction and frequent changes—might finally be bearing some taxpayer returns.
Administration officials said a MetLife purchase of the American Life Insurance Co. unit, coupled with a separate public offering of another unit known as American International Assurance Ltd., could eventually produce up to $45 billion for taxpayers.
The officials were further cheered by the stability in the stock and debt markets, which has given the likes of MetLife the confidence to make such a large purchase. A year ago, virtually no insurers had the capital or shareholder support to consider such deal making. MetLife shares rose 3% Tuesday after The Wall Street Journal reported the deal discussions.
"This could be that big first step so the government can show progress on AIG. Monetizing this is a key first step," a person familiar with the matter said.
The funds from a MetLife deal would amount to just a token share of the sums lavished on AIG. In addition to $47 billion in loans and equity interests held by the Fed, the U.S. Treasury holds an additional $45 billion of preferred shares made via the Troubled Asset Relief Program. The government also spent $33 billion buying distressed mortgage assets linked to AIG.
The government also committed roughly $60 billion in funds for the AIG rescue that haven't been drawn upon.
In an interview in December, AIG Chief Executive Robert Benmosche said it would likely take AIG years to fully repay U.S. aid.
"We have to sell certain parts of the company off; the economy has to recover and we have to refinance some of our businesses," said the 65-year-old CEO. "We have a lot of things to do yet before we can see a way clear to paying back the taxpayers, which is the highest priority."
Last year, UBS Investment Research calculated the value of the unit—known as Alico—at around $20 billion. Since 2007, Alico has suffered greatly, with revenue dropping by about 50% to under $10 billion in 2008. MetLife posted $51 billion in revenue in 2008.
"The price talk of $14-$15 billion is on the low end," in view of Alico's annual operating income of roughly $3 billion plus before the AIG bailout, said Rob Haines, a debt analyst at CreditSights Inc. "If we get back to a more normalized environment this business would be a cash-generating machine; but AIG is under a lot of pressure to start getting bigger deals done," he adds.
The entanglements between government and private business continue to cause a furor on Capitol Hill. Some lawmakers have recently sought more information about the AIG rescue. Federal Reserve Board Chairman Ben Bernanke defended the Fed's dealings regarding AIG on Tuesday.
But facing political pressure, he said he would welcome a full review of its actions by federal government watchdogs.
Late Tuesday the New York Fed released 250,000 pages of documents to the House Committee on Oversight and Government Reform.
People close to AIG say it has been difficult to craft a merger deal in the midst of intense political and media scrutiny.
Still, discussions between MetLife and AIG have picked up in recent months. The insurers have broadly agreed on price and are now working on final deal points, though some material issues remain that could scuttle the deal, said these people. It is unlikely the government or AIG will need to help finance the transaction, said the people close to the talks. Under one scenario, AIG may end up taking some MetLife shares.
An Alico deal would vastly expand MetLife's international reach, and put it in a league with the world's largest players including Allianz SE, and AXA SA.
MetLife is the No. 1 seller of life insurance in the U.S., with a market share topping 10%. In recent years it has made overseas expansion a priority. But nothing has yet had the scale of Alico, which sells life insurance in 50 countries, varying from Japan to Bahrain.
The deal talks have been complicated by the role of Mr. Benmosche, who was chairman and CEO of MetLife from 1998 until 2006. When assuming the AIG post in August 2009, he held about 500,000 MetLife shares and about two million MetLife stock options, according to a person familiar with the matter at the time.
To handle potential conflicts of interest, AIG set up an independent special transaction committee to mange negotiations between the two companies, while also keeping Mr. Benmosche insulated from the talks.
An AIG spokeswoman said the company wouldn't comment "on rumors and speculation."
A MetLife spokesman said in a statement that "our philosophy regarding M&A activity is that any deal MetLife pursues would be strategically important and financially attractive to our shareholders."
AIG, founded in China in 1919, at its peak operated in more than 130 countries and jurisdictions around the globe, creating the globe's most extensive network of insurance operations. Many U.S. rivals have struggled to get solid footholds in countries where AIG long has been a leading player.
Notice throughout his 2-page letter to GAO, Ben mentions only AIG and refers to review of Fed action regarding only AIG.
Ben does not say a word about the heart of the scandal, the 100% bailout of Goldman Sachs and other big domestic and foreign banks.
Ben does not say the Fed welcomes a GAO investigation of how the Fed managed and directed the extension of credit to AIG to bailout Goldman Sachs.
Ben does not say the Fed welcomes a GAO investigation of the role of Stephen Friedman, who was Chairman of the Federal Reserve Bank of New York as well as Goldman Sachs Board member at the time the NY Fed bailed out Goldman Sachs through AIG.
Ben does not say the Fed welcomes a GAO investigation of possible insider trading by Stephen Friedman, who was Chairman of the Federal Reserve Bank of New York as well as Goldman Sachs Board member, as outlined in the Rep Darrell Issa's Oct 30, 2009 letter to NY Fed:
"It is also disturbing that, at the time this secret deal was made, FRBNY Chairman Stephen Friedman, a member of the board of Goldman Sachs, purchased more than 50,000 shares of Goldman Sachs before knowledge of the FRBNY’s bailout of Goldman Sachs and other AIG counterparties became public knowledge. According to news reports, this transaction has earned Mr. Friedman over $5 million in profit."
http://www.scribd.com/doc/24908829/Letter-from-Rep-Darrell-Issa-to-N-Y-F...
http://www.federalreserve.gov/monetarypolicy/files/letter_aig_20100119.p...
Just in time to give him street credit before the vote, but not in time for the audit to actually be completed. Very politically savvy Ben.