Darrell Issa Is In Possession Of AIG's Redacted Schedule A, Wants To Make List Public

Tyler Durden's picture

It appears America's taxpayers are finally about to find out just what worthless securities they received in exchange for 100 cents on the dollar, courtesy of Goldman, Soc Gen, ML et al. when Bernanke and Gaithner, or whoever, decided to pay the banks in full for multi-billion dollar portfolio. As a reminder, the list in question is the now infamous Schedule A, which was redacted across the board, and which the SEC gave its blessing for secret treatment well into 2018.

Shahien Nasiripour of the Huffington Post writes:

UPDATE: 12:40 p.m. - Rep. Issa Still Pushing For AIG Disclosures

Obama administration scourge Darrell Issa (R-Calif.) announced Wednesday that congressional investigators have in their possession one of the most sought documents in the New York Fed-AIG saga: A detailed list of the souring assets taxpayers purchased from the world's biggest banks for 100 cents on the dollar.

The Federal Reserve Bank of New York 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.

Now Issa, the ranking Republican on the House Committee on Oversight and Government Reform, wants to make the whole thing public.

The document is part of 250,000 pages of internal documents on the AIG deliberations subpoenaed by the oversight committee.

It lists the toxic mortgage bonds that Goldman Sachs, Merrill Lynch and other banks insured through AIG. Those insurance contracts, called credit default swaps, are what the New York Fed ultimately took off AIG's books, paying the banks 100 cents on the dollar for souring mortgage bonds -- home mortgages that were bundled together and securitized. The banks could never have gotten anywhere near such a generous deal on the open market, so the move served essentially as a direct subsidy to those banks from taxpayers.

But taxpayers still don't know exactly what they own. The public knows that it owns a certain amount of assets, but none of the details. Taxpayers don't know which bundles of mortgages it purchased from AIG; how the banks were valuing those mortgages; how much collateral they had demanded from AIG on those securities; or which bank bundled those mortgages into securities.

In short, if Issa is successful in getting the document entered into the public record taxpayers will finally know just how much they overpaid.


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docj's picture

I certainly hope Rep. Issa is employing the services of a food taster and a remote car starter these days.

ptoemmes's picture

Dear Mr. Issa,

Just "Pentagon Papers" it.  Sometimes you just have to break the law.  Ask Hank, Timmah, and Ben.

I am sure ZH will be glad to receive a copy and do the right thing with it.


Chopshop's picture

this is huge news bc it is actual price discovery !!

2nd only to TD's heads up on MM funds, which is an epic shot over the collective bow.

10044's picture

Future news:CNBC learns it has been reported that Rep Issa has died over a suspected suicide.

ShankyS's picture

I'd say it is a matter of national security that this list be made public. Systemic risk clearly exists if this list is not released.

glenlloyd's picture

I can't wait to see it......

Cistercian's picture

 Great news.Gee, I hope a staffer accidently e-mails it everywhere.

 This may be the beginning of the end for GS et al.When the public sees it, I pray the perp walks begin.

Ripped Chunk's picture

Keep praying.

We are dealing with a powerful cartel here. Not a few guys hiding, hoping they would not be found out.

Cistercian's picture

 Prayers answered!!!!!!!

 At least the info release.


 Now for the perp walks.

 Of course, the information looks particularly bad for GS, the tapeworm of Wall St.

Unscarred's picture

...the SEC gave its blessing for secret treatment well into 2018."

Are you fucking kidding me!?  This is going to be the Kennedy cover-up of my generation?  Amazing.

I guess now we really know how fucked up this whole mess really is.

VegasBD's picture

Maybe for us, but not normal americans. Try to explain schedule A papers and what it means during commercial breaks of american idol....

Anonymous's picture

I'm not a Wall Street guy, so maybe I'm missing something. I thought I would run this by the ZH readers and hopefully get some feedback from people more in the know than I.

Is it possible the main reason for the AIG bailouts was this - Wall Street managed to create over $500 trillion (according to the Bank of International Settlements) in derivatives on a few $trillion in actual assets. Most of these derivatives are essentially no more than one insurance policy piled on top of another, so if one fails, they all fail, like dominos. If the FED takes the underlying assets (MBS's, etc.) and holds them so they don't fail, and if they pay off AIG's counter-parties at 100 cents to cancel the bottom level of CDS's, the rest of the swaps essentially cease to exist. In other words, the FED figured it was better to unwind things by paying out a few $hundred billion to cancel CDS's, and putting a few $trillion on their balance sheet, rather than see what happens when $500 trillion in imaginary money goes "poof". Make any sense?

BTW - Please don't take this as excusing the FED's actions, I'm in the let the TBTF's fail and end the FED camp.

Commander Cody's picture

Government in the Sunshine baby!

Anonymous's picture

i think this congressman is pretty dumb as are a lot you , apparently -i don't know why you are so damn curious about these "toxic" assets , given the us taxpayer is sitting on a PROFIT through ML 3- if this disclosure jeopardizes that position vis a vis fed market counterparties, as US tax payers you may yet regret that...but heck, in the name of populism, who cares

Commander Cody's picture

I guess someone had to believe the asset "profit" bullshit.  It was only natural that some made payments on their loans in the portfolio.  These tranches of mortgages are not referred to as "toxic" for nothing.  The real question is what did the Fed pay for the portfolio and what is it really worth?  From all appearances, what is suggested is that the Fed paid par (assuming all loans perform) for all mortgage-backed assets on its books so that the holders wouldn't have to take losses.  Oh, by the way, that means you and I are responsible for the losses on those "toxic" assets.  As taxpayers, we have that responsibility.  Happy?

Anonymous's picture

Interesting position. What about the $1.8 Trillion +/- in Agencies, MBS and Treasuries the government has very publicly put on its books? What impact will the knowledge of these positions have on their profitablity?

Anonymous's picture

1. Exactly how was this profit generated? Because the accounting is clear as mud as to where these profits are coming from.

I'm not saying their claimed profit isn't a legitimate claim. It could very well be. But the current accounting does not provide *any* useful data regarding the mechanics of the profit generation.

2. You treat ML3 as the sole justification/payback mechanism and then sweep the rest of the wealth transfer away. You understand the bailout terms were *severely* miscalculated to the banks benefit right? This is one of the many reasons they paid it back so quickly! What about the AIG wealth transfer?

I don't have the same homoerotic obsession with the industry as the average ZH reader does, but your position is approval of a trillion dollar wealth transfer from the taxpayer to the finance/banking industry for a couple billion. I'm sure you wouldn't allow yourself to get fleeced in a deal like this, I'm not sure why you would allow your tax dollars to evaporate like that.

Commander Cody's picture

The last two sentences in my above post were cynical.

I'm presuming the $trillion+ of MBS assets the Fed bought were bought at or near par. Why mess up the good thing they started with AIG?  The question then remains as to how they get rid of them?  Will the Fed get more than they paid?  Whose assets are they?  Who gained on the deals?  I'm thinking that the alleged "profit" so well publicized recently was simply loan payments from the portfolios.

Of course, I may not know my ass from my elbow and just go have an early cocktail.

smalltownlawyer's picture

Yes, yes, #208005 is absolutely right. If we are spending billions and trillions to put off the inevitable, but it is working for right now, by all means let's not upset the cart. Also, if you're hooked on crack but still have some applicances left in the house that you can sell for tomorrows fix, it makes no sense to put down the pipe yet.

MainStMonkey's picture

To Anonymous,

That very well could be the reason the FRBNY did what they did, but it doesn't explaing why they didn't want the counterparty information to get out. If everyone was made whole and there was no more default issue then it would stand to reason that they (FRBNY) would want to thump their chest right then an there and not ex post facto as it were. I think it is clear that the FRBNY wanted to reduce it's appearance of "moral hazard" by getting the counterparty banks out at par. The real kicker here is that they allowed the counterparty banks to use their collateral and securities from Maiden Lane III as collateral for zero cost $ from the FED window. Also, it is even more stunning that the FRBNY allowed banks like SocGen access to the FED window without being a primary dealer. 

I personally hate conspiracies, but it is starting to look like their is an illuminati-esqe banking cabal that is colluding to their own personal betterment at the detriment of everyone else. Maybe I'm wrong (I probably am) but these people all look way too cozy for me.

Another question is why didn't this congressional pannel ask any of the counterparties or the froriegn (French) bank regulators, who apprently agreed initially to haircuts on this crap if the disclosure was public and transparent (Gee - I wonder why they wanted that stipulation?), to testify? 

Yes We Can. But Lets Not.'s picture

When I saw the headline, I had a deja vu moment, a recalling of the times back in the 80's when I'd enter my apartment in a downtown Chicago crap-hole building, flick the light switch, and then see and hear the roaches scurrying for cover.

Darrell Issa, you are a can 'o RAID incarnate, and I mean that as a deep compliment....

Anonymous's picture

I recall back in the 80's when I'd enter my shoe box sized studio in New York, I'd turn on the microwave...whole lot of poppin going on.

You go Darrell. You know where they are. Press the button.

Anonymous's picture

When is that do nothing, see nothing, Bush SEC Chairman Cox going to be testifying?

Kanjorski needs to be run out of the country on a rail, providing cover for Timmy. Maybe he is not up for reelection or just going senile with his Monday morning QB analogy. I guess he's one of the few in congress that believes that Geithner, NYFRB, Bernanke and Paulson saved the world and was looking out for the taxpayers.

Timmy started lying right out of the gate at his opening statement when he said he welcomed the committee's questioning on the AIG bailout.

Zippyin Annapolis's picture

Kanjo will not run again--if he does he will be defeated easily. Shopping for a job in the financial industry--dig?

Anonymous's picture

in the name of populism, why did we buy them? 99.9% against wallstreet bailout ...

Hey I got a heavy trashbag with a question mark on it for sale... 175 billion and it's all yours.

bugs_'s picture

NO.  We already know how much we overpaid!

What we don't know is to who it was paid!

Anonymous's picture

In theory, GS had to receive 100% on the dollar.
They were long the mortgage bonds, and were
paying AIG to for insurance by buying CDS contracts.
With a loss of say 70% on the bonds AIG was liable
to pay 70% recovery. In calculating how much
GS should have received for the bonds the "toxicity"
should not even be considered: they should have been
reimbursed at par as long as they paid for insurance.

"Should" is the key here. What would have happened
if the government hadn't interfered: AIG would have gone
bankrupt because they overestimated the quality
of the assets they insured and would not have been
able to reimburse GS for the losses. Goldman,
after receiving whatever AIG could potentially pay,
would have taken giant losses for underestimating
counterparty risk to them from AIG.

The goverment's intervention screwed things up.
They only had to withhold AIG help, and GS would
have gotten only cents on the dollar, if anything.

In theory, Goldman did nothing wrong. In practice,
they most probably lobbied the Fed heavily to interfere.
The Fed had all the leverage, and they didn't use it.

DaveyJones's picture

Why would you leverage against yourself? Nothing makes sense until you realize its simple corruption.   

Anonymous's picture

Exactly, it was Paulson! The former chairman of GS robbed the American to pay for Merryl Lynch's purchase by BAC. Also pay for the AIG bailout which ultimately bailed out the rest of the crony wallstreet capitalists.

Anonymous's picture

Where is that pit bull Grayson from FL? I thought he liked to bite these guys in the ass?

Screwball's picture

This won't matter, nothing will.  After watching that 5 1/2 hour debacle today - we are just screwed.  I haven't been this pissed off in a long time.  These people are incompetent, ignorant, and apparently bought off.  These people would fuck up a one car funeral.

Ripped Chunk's picture

Sadly, I am going to have to agree.  Kabuki theater taken to its highest level.

Anonymous's picture

PAGING Alan Grayson!!!!!!!


Can you please stand in as the ONLY adult in the room and get simple answers to simple questions for the American people?? Our elected leaders are about as effective as a bunch of 2nd graders in a sandbox--They have all SOLD AMERICA up the river to keep the corruption going and we need SOMEONE to stand up for us!!

Tim Geithner, the FED, and Congress are the ultimate in Domestic Financial Terrorism!!

Anonymous's picture


Just to be a stickler, shouldn't it be that:

Issa is in possession of an UNREDACTED Schedule A???

that's just how I roll.

carbonmutant's picture

There is no way this will not be made public.

There are too many fingers in the pie.

However there may be some delay caused by a little light blackmail.

Anonymous's picture

Mers was named nominee on the mortgage and filed at the Register Of Deeds in Greenville SC, supposedily according to a lost note affidivat the original lender RBMG sold the note and according to MERS servicer ID the loan was transfered off of the MERS system and MIN# deactivated because of a sale to a non-mers member in 2002. NO ASSIGNMENT WAS RECORDED.Now the new owner EMC sold the loan to Bear Stearns which deposited into the Asset Backed Securites which did an assignment/sell to JP MORGAN CHASE as trustee. Now there has been a foreclosure started on the loan in March 2009 by The Bank OF New York Mellon as successor trustee for JP MORGAN CHASE who claims to be the real party in interest and hold the note. By way Of an assignment which was recorded at the ROD after the LIS-PENDENS and after the filing of complaint.Here is more fraud because the assignment was from MERS on behalf of the original lender RBMG which is defunct and has been since 2005 to the THE BANK OF NEW YORK MELLON. MERS has no authority to do an assignment because the loan was transferred from them in 2002 and Mers was Longer the mortgagee as nominee of record.Now are you with me( no chain of title) the BANK OF NEW YORK MELLON produced in discovery to me an allonge RBMG to EMC along with the lost note affidivat. EMC showed an allonge to JP MORGAN CHASE which skipped BEAR STEARNS. BEAR STEARNS was the depositer into the securities. First let start with the allonges: according to the UCC an allonge is only used when there is NO ROOM ON THE ORIGINAL NOTE FOR ENDORSEMENT and must be firmly attached as to become a part of the note. AN ALLONGE cannot be used to transfer interest and is invalid if there is room on the note for endorsements and is invalid it not attached. A lost note and two allonges that were not signed and not dated and even skipped BEAR STEARNS that desposited it into the securities is the purported chain of title , now let’s look at the prospectus:Bear Stearns Asset Backed Securities Inc · 424B5 · Bear Stearns Asset Backed Certificates Series 2003-2 · On 6/30/03
Document 1 of 1 · 424B5 · Prospectus
. Assignment of the Mortgage Loans; Repurchase At the time of issuance of the certificates, the depositor will cause the mortgage loans, together with all principal and interest due with respect to such mortgage loans after the cut-off date to be sold to the trust. The mortgage loans in each of the mortgage loan groups will be identified in a schedule appearing as an exhibit to the pooling and servicing agreement with each mortgage loan group separately identified. Such schedule will include information as to the principal balance of each mortgage loan as of the cut-offdate, as well as information including, among other things, the mortgage rate,the borrower’s monthly payment and the maturity date of each mortgage note. In addition, the depositor will deposit with Wells Fargo Bank Minnesota, National Association, as custodian and agent for the trustee, the following documents with respect to each mortgage loan: (a) except with respect to a MOM loan, the original mortgage note, endorsed without recourse in the following form: “Pay to the order of JPMorgan Chase Bank, as S-40——————————————————————————–
trustee for certificateholders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2 without recourse,” with all intervening endorsements, to the extent available, showing a complete chain of endorsement from the originator to the seller or, if the original mortgage note is unavailable to the depositor, a photocopy thereof, if available, together with a lost note affidavit; (b) the original recorded mortgage or a photocopy thereof, and if the related mortgage loan is a MOM loan, noting the applicable mortgage identification number for that mortgage loan; (c) except with respect to a mortgage loan that is registered on the MERS(R) System, a duly executed assignment of the mortgage to “JPMorgan Chase Bank, as trustee for certificateholders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2, without recourse;” in recordable form, as described in the pooling and servicing agreement; (d) originals or duplicates of all interim recorded assignments of such mortgage, if any and if available to the depositor; (e) the original or duplicate original lender’s title policy or, in the event such original title policy has not been received from the insurer, such original or duplicate original lender’s title policy shall be delivered within one year of the closing date or, in the event such original lender’s title policy is unavailable, a photocopy of such title policy or, in lieu thereof, a current lien search on the related property; and (f) the original or a copy of all available assumption, modification or substitution agreements, if any. In general, assignments of the mortgage loans provided to the custodian on behalf of the trustee will not be recorded in the appropriate public office for real property records, based upon an opinion of counsel to the effect that such recording is not required to protect the trustee’s interests in the mortgage loan against the claim of any subsequent transferee or any successor to or creditor of the depositor or the seller, or as to which the rating agencies advise that the omission to record therein will not affect their ratings of the offered certificates. In connection with the assignment of any mortgage loan that is registered on the MERS(R) System, the depositor will cause the MERS(R) System to indicate that those mortgage loans have been assigned by EMC to the depositor and by the depositor to the trustee by including (or deleting, in the case of repurchased mortgage loans) in the computer files (a) the code in the field which identifies the trustee and (b) the code in the field “Pool Field” which identifies the series of certificates issued. Neither the depositor nor the master servicer will alter these codes (except in the case of a repurchased mortgage loan). A “MOM loan” is any mortgage loan as to which, at origination, Mortgage Electronic Registration Systems, Inc. acts as mortgagee, solely as nominee for the originator of that mortgage loan and its successors and assigns. S-41——————————————————————————–
The custodian on behalf of the trustee will perform a limited review of the mortgage loan documents on or prior to the closing date or in the case of any document permitted to be delivered after the closing date, promptly after the custodian’s receipt of such documents and will hold such documents in trust for the benefit of the holders of the certificates. In addition, the seller will make representations and warranties in the pooling and servicing agreement as of the cut-off date in respect of the mortgage loans. The depositor will file the pooling and servicing agreement containing such representations and warranties with the Securities and Exchange Commission in a report on Form 8-K following the closing date. After the closing date, if any document is found to be missing or defective in any material respect, or if a representation or warranty with respect to any mortgage loan is breached and such breach materially and adversely affects the interests of the holders of the certificates in such mortgage loan, the custodian, on behalf of the trustee, is required to notify the seller in writing. If the seller cannot or does not cure such omission,defect or breach within 90 days of its receipt of notice from the custodian, theseller is required to repurchase the related mortgage loan from the trust fund at a price equal to 100% of the stated principal balance thereof as of the date of repurchase plus accrued and unpaid interest thereon at the mortgage rate to the first day of the month following the month of repurchase. In addition, if the obligation to repurchase the related mortgage loan results from a breach of the seller’s representations regarding predatory lending, the seller will be obligated to pay any resulting costs and damages incurred by the trust. Rather than repurchase the mortgage loan as provided above, the seller may remove such mortgage loan from the trust fund and substitute in its place another mortgage loan of like characteristics; however, such substitution is only permitted within two years after the closing date. With respect to any repurchase or substitution of a mortgage loan that is not in default or as to which a default is not imminent, the trustee must have received a satisfactory opinion of counsel that such repurchase or substitution will not cause the trust fund to lose the status of its REMIC.
I’m not a MOM loan the loan transferred off of MERS, Mers no longer tracked the assignments and let’s not forget I HAVE IN MY POSSESSION THE ORIGINAL NOTE STAMPED FULLY PAID AND SATISFIED NEGOTIATED TO ME FROM RBMG. The note is date stamped MARCH 2002 and has been in my possession since 2004 along with a letter from the RBMG stating the loan is fully paid and satisfied address to me which is the declaritory letter.