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Grayson Rips Bernanke Over Latest AIG Bailout, Insinuates Attempted IRS Fraud In Grossly Illegal Deal

Tyler Durden's picture




 

One day, Vince McMahon will pay handsomley to get Ben Bernanke and Alan Grayson in the squared circle. Until that day, we should just hope and dream. In the meantime, we have litters and public appearances by the Florida Congressman, who takes the latest AIG "taxpayer payback" opportunity to remind everyone of just how deeply he loves the "we create money out of thin air" institution that is the Federal Reserve.

I write with concern about two announced deals that are lauded by AIG CEO Robert Benmosche as AIG's plan to 'pay back the taxpayer'. In reading through the deal, it looks to me like the Federal Reserve is simply engaged in yet another disguised bailout of AIG. It's not surprising that the New York Fed continues to shovel money at AIG using its balance sheet, since this seems to be official policy, but this time, the bailout also involves cheating the IRS.

In describing the deal specifics:

This relationship is not significantly different from just making the subsidiaries collateral for the existing loan from the New York Fed, with four exceptions. One, the FRBNY's right are downgraded in this deal from creditors to preferred shareholders. Two, AIG gets to claim "repayment" and take a tax loss to reduce the company's income taxes. Three, the FRBNY credit facilities are already collateralized. Four, the New York Fed owns nearly 80% of AIG, putting it on all sides of the deal.

And most brazenly, and deserving of applause, the allegation that Bernanke is implicilty breaking the law by his most recent AIG bailout:

As the New York Fed owns most of AIG, this deal could be considered a faked sale to generate a capital loss for the purposes of injecting Treasury funds into AIG without the consent of Congress. Please explain the legality of the arrangement.

Full Grayson letter to Bernanke:

 

 

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Tue, 12/08/2009 - 17:37 | 157029 bugs_
bugs_'s picture

In America I thought we had to explain the illegality of the arrangement.

Tue, 12/08/2009 - 19:20 | 157174 Anonymous
Anonymous's picture

You must never have had a tax audit. The IRS will pull something out of your file and say, convince me this is legit or you are going down.

In this case the letter writer has already put force a case for illegality, and is asking "so, am I wrong?"

Tue, 12/08/2009 - 20:22 | 157288 faustian bargain
faustian bargain's picture

I'm not sure, but I think that doesn't apply when the subject is within the government. Or it shouldn't anyway.

Tue, 12/08/2009 - 22:19 | 157426 Anonymous
Anonymous's picture

Grayson understands that government officers should be held to a HIGHER standard of legality than anyone else. In the first place, one cannot lead except by example. In the second place, they take an oath.

Wed, 12/09/2009 - 10:46 | 157770 zeta34
zeta34's picture

The 28th ammentment states, any governmental action that benefits Goldman Sachs "are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency"

 

If that quote looks familiar, it is the exact quote from the TARP bill regarding Hank's usage of the $700B to gift to Goldman.

 

Not to worry, if Paulson and Geithner don't work out, Obama will surely reach outside of Wall Street to find the next treasury secretary.  In all sincerity, after Jamie Dimon, they are running out of corrupt, seasoned Wall Street CEOs to tap.  Better hope Dimon finally puts the nail in the coffin of the USD.

 

If anyone is curious, as America was melting down last September, the Wall Street firms had oil tankers floating in the ocean, so when the USD disappeared the banks would still exist.

Tue, 12/08/2009 - 23:13 | 157476 Careless Whisper
Careless Whisper's picture

The problem is that this isn't an arms length transaction and therefore may be fraudulent. Bernanke was so arrogant when he wouldn't answer questions to the Congressmen a few months ago that he is rightly in their cross-hairs.

Wed, 12/09/2009 - 03:37 | 157626 Anonymous
Anonymous's picture

The NY Fed is not the Government. Much as they may be acting as such right now. Neither is AIG.

It would seem to me to be a case of two private companies in cahootz.

Tue, 12/08/2009 - 17:43 | 157030 Anonymous
Anonymous's picture

WHEN is this stunning parade of abuses of taxpayer monies going to be stopped?? STUNNING.

Tue, 12/08/2009 - 18:12 | 157070 Anonymous
Anonymous's picture

Read Revelation in the Bible. That'll tell ya!

Tue, 12/08/2009 - 17:47 | 157036 Anonymous
Anonymous's picture

fuck you bugs, commy pig

Tue, 12/08/2009 - 17:58 | 157058 bugs_
bugs_'s picture

LOL

Tue, 12/08/2009 - 17:48 | 157038 Cursive
Cursive's picture

Other than possibly Ron Paul, is there any elected official who has half the intelligence of Mr. Grayson?  Is it intelligence or just intestinal fortitude or some combination of both?  Why is he the only person saying what is on my mind?  Who else will openly confront the FR on this phony deal?  Keep it up Mr. Grayson, keep it up.

Tue, 12/08/2009 - 17:49 | 157041 sysin3
sysin3's picture

uh, everybody else be bought and paid for ?   Just my guess ;-)

Tue, 12/08/2009 - 18:11 | 157066 Enkidu
Enkidu's picture

++ and +

Tue, 12/08/2009 - 18:38 | 157110 VegasBD
VegasBD's picture

Alan Greyson's stock broker is....Peter Schiff. Hes a client of Europac.

I cant wait till Schiff is up there firing off Qs at these people!

Tue, 12/08/2009 - 20:16 | 157279 faustian bargain
faustian bargain's picture

you're shitting - really? i never would have guessed those two being hooked up.

Tue, 12/08/2009 - 18:39 | 157113 Neo of Zion
Neo of Zion's picture

As a constituent, you should know he gets crushed in Central Florida for his standing up to ObamaCare v8.2. I rarely hear him applauded for his finance work.

Granted, I am a hammer, so I see everything as a nail, so I just focus on the economic policies in detail...regardless, if he kicked puppies in his free time I would still support him on the merits of this wrks alone.

Tue, 12/08/2009 - 17:50 | 157042 digalert
digalert's picture

After blaming the last administration, who was asked "prior to your current posistion where were you and what job did you hold?

jeopardy music

Times up. Who is Turbo Tax Timmy Geithner from the FRBNY?

bingo

Tue, 12/08/2009 - 17:55 | 157052 lsbumblebee
lsbumblebee's picture

I'd give McMahon an ounce of gold to see Grayson's ass in Ben's face.

Tue, 12/08/2009 - 17:58 | 157057 Anonymous
Anonymous's picture

grayson is both rich, very, smart, mucho, and totally disgusted and mad at the powers that be, cc the irs, doesn't get any better than that

Tue, 12/08/2009 - 18:05 | 157062 deadhead
deadhead's picture

Thanks Mr. Grayson for keeping all over these guys.

Bernanke must go.

Geithner must go.

Summers must go.

Schapiro must go.

P.S.  Rahm: these folks are phucking up so bad that even the disjointed Repubs might blow your team out in the midterms.

Tue, 12/08/2009 - 19:18 | 157173 Gordon_Gekko
Gordon_Gekko's picture

Obama must be impeached as well. What a COMPLETE DISGRACE he has been. Puppet leader of a banana republic.

Tue, 12/08/2009 - 19:24 | 157180 Miles Kendig
Miles Kendig's picture

Impeachment should not be limited to the POTUS GG.  Unfortunately, the concept of justice is even more lost within the halls of congress than it is outside of them.

Wed, 12/09/2009 - 00:08 | 157529 agrotera
agrotera's picture

Hear-hear DH, GG, and MK!!!!!!!!!!!!!!!!!!!!!!!!!!

Wed, 12/09/2009 - 12:34 | 157925 zeta34
zeta34's picture

It seems that Obama actually *WAS* listening to Rev Wright the past 20 years.

Tue, 12/08/2009 - 18:10 | 157065 Anonymous
Anonymous's picture

Other than possibly Ron Paul, is there any elected official who has half the intelligence of Mr. Grayson?

Yea, Lyndon Larouche, genius status. He is the founder and contributing editor of the Executive Intelligence Review, and has written prolifically on economic, scientific, and political topics, as well as on history, philosophy, and psychoanalysis.

Tue, 12/08/2009 - 18:11 | 157067 xamax
xamax's picture

To Deadhead :

Fully agree but you forgot one : OBAMA must go . 

Tue, 12/08/2009 - 18:18 | 157079 Silver-Is-Better
Silver-Is-Better's picture

To Deadhead :

Fully agree but you forgot one : OBAMA must go

 

Where is the transparancy that we were promised over and over and over?

Tue, 12/08/2009 - 18:27 | 157096 Commander Cody
Commander Cody's picture

Its opaque transparency of the political kind.

Tue, 12/08/2009 - 18:19 | 157080 Anonymous
Anonymous's picture

And the fllecing goes on.....

Tue, 12/08/2009 - 18:24 | 157088 ghostfaceinvestah
ghostfaceinvestah's picture

This is the kind of secrecy Bernanke wants to protect from an audit, because of course if Congress knew this it would hurt his ability to set rates, or something like that.

Tue, 12/08/2009 - 22:27 | 157433 Gordon_Gekko
Gordon_Gekko's picture

Yeah, interest rates - the indicator which doesn't actually mean anything anymore because it has NOTHING to with ANYTHING happening in the real world, MASSIVELY gamed as it is.

Tue, 12/08/2009 - 18:27 | 157095 Michael
Michael's picture

I nominate Ron Paul as the next and last Fed Chairman. He will be entrusted to conduct a complete formal audit, then dismantle it.

Tue, 12/08/2009 - 20:18 | 157281 faustian bargain
faustian bargain's picture

talk about dreaming.

but yeah, that'd be cool.

Tue, 12/08/2009 - 20:30 | 157297 Schlep
Schlep's picture

Only in my dreams are Bernanke and the Federal Reserve eliminated.

Tue, 12/08/2009 - 20:57 | 157346 Bubby BankenStein
Bubby BankenStein's picture

Thank you very much!  Great idea.

Wed, 12/09/2009 - 00:10 | 157532 agrotera
agrotera's picture

second that--idea of the century!!!!!!!!!!!!!!

Wed, 12/09/2009 - 01:39 | 157585 Fish Gone Bad
Fish Gone Bad's picture

+1

Tue, 12/08/2009 - 18:46 | 157125 max2205
max2205's picture

Is the IRS any better than the SEC or Congress in prosecuting fraud. FBI, uh, only if your beating down BHO's agenda.

We are so screwed.

Tue, 12/08/2009 - 19:08 | 157158 Anonymous
Anonymous's picture

I like Grayson for a lot of his toughness and his way of doing business. Do not forget though, that he is a Democrat that is pushing a paid vacation bill.

"The Paid Vacation Act will require at least one week of paid vacation for employees at companies with at least 100 employees. Full- and part-time (25 hours per week/1250 hours per year) workers will be eligible after one year of service.

Three years after enactment, companies with at least 50 employees would be required to offer at least one week of paid vacation, and companies with at least 100 employees would be required to offer at least two weeks of paid vacation."

As an employee, this sounds great to me, but as an American that believes in freedom and a "free market" (if there is such a thing) I don't really agree.

I must say though, I've heard more good things coming from Grayson than I've heard from any Conservative in the past 6 months. I know both side of Congress are total frauds, and do not represent us anymore, but I still view things as a conservative.

Tue, 12/08/2009 - 22:27 | 157434 Anonymous
Anonymous's picture

I think a lot of those labor laws started with Theodore Roosevelt, who was a Republican.

Wed, 12/09/2009 - 20:11 | 158411 Doc
Doc's picture

To be fair though some labor laws had merit. I don't think even the most free-market capitalists today would argue for child labor being legal or against workers' compensation in the case of an industrial accident.

It's when you end up with ten-yeared janitors in the NYC public school system or auto-workers earning $50 an hour where things get a bit out of control...

Well then again, maybe this guy would argue for child labor:

http://www.youtube.com/watch?v=qxv35KNSyqE&feature=related

Tue, 12/08/2009 - 19:15 | 157169 Rainman
Rainman's picture

AIG is the pesky kid brother, broke and lying around your house.....always needing some change to tide him over. Can't toss him cause he's got nowhere to go.

So Grayson spotted the backdoor bailout.

Since Uncle Slam runs this store, Grayson has every right to get answers. It'll be curious to see the answer he finally gets after the Fed lawyers get done scrambling around. IRS won't do squat about any of it. A tangled web. 

  

Tue, 12/08/2009 - 19:16 | 157170 E pluribus unum
E pluribus unum's picture

Coming soon: Airliner that departs Washington, DC en route to Orlando mysteriously crashes killing all onboard including a freshman congressman from Central Florida.

Tue, 12/08/2009 - 19:21 | 157176 Gordon_Gekko
Gordon_Gekko's picture

The CIA is pretty adept at these kind of shenanigans.

Tue, 12/08/2009 - 19:28 | 157185 Miles Kendig
Miles Kendig's picture

GG, actually the CIA is so inept that they contract most of this sort of work out.  Besides, this process adds one more level of plausible deniability to the mix.  Something governments are always seeking. Hence the reason England is so upset with the way we abused Diego Garcia over these past few years.

Tue, 12/08/2009 - 20:13 | 157277 Gordon_Gekko
Gordon_Gekko's picture

+100

Tue, 12/08/2009 - 20:43 | 157321 malusDiaz
malusDiaz's picture

Thats where Black-Water comes in.

Tue, 12/08/2009 - 21:34 | 157385 Miles Kendig
Miles Kendig's picture

To an extent.  Black-Water is more like a Houdini diversion tho...  Just like Houdini, the diversion needs to be really good and this is one thing some very clever thinkers at CIA understand full well.

Wed, 12/09/2009 - 20:13 | 158412 Doc
Doc's picture

The artist formerly known as blackwater is now known as Xe... how's that for a diversion?

Tue, 12/08/2009 - 23:56 | 157516 Anonymous
Anonymous's picture

Okay GG, name one incident where they showed how adept they are. You've been watching too many B-videos.

Tue, 12/08/2009 - 19:16 | 157171 Anonymous
Anonymous's picture

I think Bernanke and Co. will insitute a small 'Market' panic to ensure His reapointment, a flight to 'safety' if u will ?

I would expect -10%,15% on the market in the next 2 weeks

Tue, 12/08/2009 - 19:29 | 157187 Green Sharts
Green Sharts's picture

I thought Grayson asked all the right questions in that letter.  This most recent deal between the Fed and AIG stinks to high heaven.  I don't see any possible benefit to the Fed.  They moved down the capital structure but still have the same maximum $25 billion payoff they had with debt.  Presumably they now don't get paid interest on the $25 billion.  And AIG for some strange reason gets all or most of the upside should the businesses sell for more than $25 billion.  Based on this article it doesn't look likely that will happen:

http://bloomberg.com/apps/news?pid=20601109&sid=amaj3P5pVCyQ&pos=13

I think the most likely scenario is that AIG couldn't pay interest on all the debt, couldn't sell these business units, were looking at downgrades from the ratings agencies and this deal was cut as an extend and pretend strategy.  This isn't even debt for equity.  It's debt for a put option and an upfront payment while keeping a free call option on the businesses.  There's not a private buyer in the world who would cut that deal.  It is theft.

Tue, 12/08/2009 - 19:46 | 157216 Anonymous
Anonymous's picture

i like Grayson, but when do they start going after the man making the appointments and setting the policies. Some of these folks like Grayson need to start going after Princess "Yurtle the Turtle" Obama.

Tue, 12/08/2009 - 20:30 | 157294 waterdog
waterdog's picture

Maybe Geithner is in the blender for his resistance to the idea. He is the head of the IRS. Makes one wonder who Geithner will take down with him now that the oligarchy dislikes him and who is now planning Geithner's exit to stage left. I wonder if he knows who got the money.

 

Tue, 12/08/2009 - 20:53 | 157342 tip e. canoe
tip e. canoe's picture

tinytim as whistleblower?
now that's change i can believe in.

Tue, 12/08/2009 - 21:28 | 157308 waterdog
waterdog's picture

And while we are on the subject of Vince McMahon, that slime ball put a referee up against CM Punk on a Friday Night Smack Down. I do not see why he would not put up  a Grayson vs. Bernanke  match. Call him, I bet he would.

 

Tue, 12/08/2009 - 20:46 | 157328 spekulatn
spekulatn's picture

What about FNM and FRE?

Oh, my bad.

Never mind.

Tue, 12/08/2009 - 20:49 | 157333 Anonymous
Anonymous's picture

I don't doubt the shenanigans with TARP/AIG/etc. but whatever brought on the veiled threats about the IRS might be a bigger deal than even AIG.

1. Steal underpants
2. ?
3. Profit!

Source of income baybee. Inquiring minds wanna know, and "?" won't cut it. A massive influx of money into a banking account needs to be essplained.

Expect intensified discussions during the next several weeks about global banking and carbon trading as the last holdouts to global governance take their bribes or otherwise succumb and We the People get dragged kicking and screaming into the new millennium.

Tue, 12/08/2009 - 21:21 | 157374 Bubby BankenStein
Bubby BankenStein's picture

This shit is about as good as professional wrestling.  A series of scripted rockem sockem dramas designed to mesmerize spectators who think they give a shit, but really don't.

I totally respect and support the great work of Dr. Paul, Mr. Grayson, and several others in DC.  What does it take to get the rest of our Representatives and Senators to step up to the cold hard facts and just do what is fucking best for our country?  Are they so corrupt, bought off, or otherwise stupid to not give a shit about killing the geese that lay golden eggs?

People In Government, WAKE UP AND DEFEND THE CONSTITUTION.

Tue, 12/08/2009 - 22:31 | 157438 Gordon_Gekko
Gordon_Gekko's picture

I'm not normally given to cheerleading but this deserves an exception:

GO GRAYSON!

Tue, 12/08/2009 - 23:14 | 157477 Anonymous
Anonymous's picture

I wonder if the squid already bought property in Romania, China and Russia? It may need it when this is all over.

Wed, 12/09/2009 - 01:39 | 157586 Benzass Miphist
Benzass Miphist's picture

Grayson is too smart and unbought to last. If the MSM fails to marginalize him, someone will engineer a convenient fatal accident or medical illness. He is hitting too close to home with Ben, et al.

Wed, 12/09/2009 - 03:33 | 157625 Rick64
Rick64's picture

They will find some dirt on him.

Wed, 12/09/2009 - 03:32 | 157624 Rick64
Rick64's picture

Meanwhile I'm paying my taxes and if the economy ever recovers, its guaranteed that taxes will increase to a level where the average joe will feel like he is still in a recession. Audit the Fed thats the first step.

Wed, 12/09/2009 - 09:29 | 157694 Failure to Comm...
Failure to Communicate's picture

'Please explain the legality of the arrangement.'

Turbo timmeh to the rescue !

 

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