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New York Fed Told AIG To "Stand Down" On All Counterparty Discussions
In one week, Tim Geithner will testify before Congress on his involvement in the AIG disclosuregate scandal, which, in late 2008 sought to prevent material information about AIG counterparty make-whole arrangements from seeing the light of day. Of course, in March of 2009, following political pressure, AIG and the FBRNY caved and disclosed that $27 billion in taxpayer capital had been used to yield to the bankers' every whim and to take them out at par, while their underlying AIG CDOs were priced 50% lower, if not more. Zero Hedge previously wondered when will Goldman be approached by the SEC with questions on whether or not they sold their direct AIG protection in the form of CDS to parties under a "big boy" letter, or did Goldman transact on a $2.5 billion notional position while in possession of material, non-public information. This, of course, in addition to having absolutely no impairments on their actual CDOs, thereby providing the firm with material excess returns over and above what their total capital at risk would have been. With Goldman's Stephen Friedman accompanying Geithner in the hearings, he hope that someone in authority will finally ask the right questions. And while they are at it, and have both a Goldman and a New York Fed employee in tow, maybe they can ask why NY Fed Senior Vice President on AIG Relationship Monitoring Steven Manzari told former AIG Financial Services CFO Elias Habayeb to "stand down on all discussions with counterparties on tearing up/unwinding CDS trades on the CDO portfolio."

And, herein lies the rub, David Herzog, then AIG CFO's, when being informed that it is in everyone's best interests to simply take taxpayer capital and not antagonize the banks, writes:
Thanks, and noted on the tear up stand down.
We should get back with Goldman. I will talk with Bill [Dooley, head of AIG Financial Services].
So the questions are swirling as usual: the SIGTARP report back in November disclosed that the NY Fed has purportedly "attempted" to extract some concessions on the CDO make-whole with the AIG counterparties, and primarily Goldman Sachs and SocGen. However, due to the banks calling the Fed's bluff, the response was to pay everyone in full. Yet, in last week's FCIC hearings, Goldman CEO Lloyd Blankfein informed the public for the first time that he "never got a request to take less than 100 cents on the dollar" on the firm's AIG CDO exposure (not like it would matter to him - as noted above, the firm was fully hedged through direct CDS on AIG itself to the tune of $2.5 billion). And this latest revelation, indicates that in the disclosure of information from Geithner to the SIGTARP, somewhere along the way there was a pretty bad case of "broken telephone" - it appears the NY Fed itself was doing all it could to force AIG to "stand down" in doing the right thing for American taxpayers, which was to minimize the public capital at risk used to preserve the viability of the very same Goldman Sachs which in a few days will be paying out all time record bonuses.
Will someone in Congress finally approach Mr. Geithner and representatives from Goldman Sachs and ask them to reconcile these blatant examples of lying in the public arena? We understand that the "only" impaired party is the stupid American peasantry, but the unauditable New York Fed should be accountable to someone at some point, and that someone should not be Goldman Sachs. And yes, we do understand the inherent conflict of interest in that current FRBNY president and Geithner successor William C. Dudley, was employed by none other than Goldman Sachs, where he worked from 1986 to 2007, and where he attained the rank of Partner and Managing Director... But at least make it a little less easy for the American public to discern the "joined at the hip" relationship of the Goldman-Fed wealth reappropriation cabal.
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the amount of corruption is almost at the point of hilarity
It is hard to laugh when hundreds of billions of US dollars have been illegally distributed to banksters and Wall Street insiders. Worse still, no one is going to jail nor being taken out of a congressional questioning hearing in handcuffs even when they lie and are caught in their lie(s).
Time to exit the system.
BANK RUN BITCHES!!!
and buy gold and silver.
As Hilarity --> Infinity
$ --> 0
Apparently it's not corruption unless someone prosecutes.
"Selective" prosecution of corruption = Fascism
...but the unauditable New York Fed should be accountable to someone at some point, and that someone should not be Goldman Sachs
ROFLMAO. Why not. After all, what the past two years has taught many is that Goldman is the government of the United States.
>> NY Fed Senior Vice President on AIG Relationship Monitoring
For real?? They have a person with such a title? Truly frightening.
The NY Fed should of course cut back on the relationshipping (I just verbified that one) and start REGULATING, which is what they are supposed to do.
Seriously, how can the Fed regulate the banks when they view the job as a "relationship". WTF! You don't have "relationships" with banks, you *discipline* them.
TYLER:
Can you please post a "Question Summary" cheatsheet that our Congress critters can use during the hearing? Deep, biting questions that, you know, can guide Timmy into all kinds of fun perjury situations.
Stand down and cash the big check.
This is like the sheriff of Nottingham arresting one of the king's men....it ain't gonna happen...I guess they do really take the public for fools........
More Intentional Media Misdirection (Wall Street)
But there are multiple crimes committed when one intentionally obscures, either through omission or commission, risks that one knows of and/or has been explicitly warned about.
Henry Boerner, chairman of the Governance and Accountability Institute, said the publics rage against Wall Street is focused not so much on suspected criminal activity as on the unfairness, lack of ethics and irresponsibility of bankers. However, he said, it is the regulators who should be faulted for allowing Wall Street bankers to take risks, shatter the economy and walk away with big bonuses.
"Voters, constituents, investors, employees, borrowers, homeowners, public officials, entrepreneurs — all have been impacted by the risky and at times reckless behavior of the leaders of the nations largest financial services organizations," he said.
http://tinyurl.com/ycr8uq6
What does all that talent keep saying? We'll leave....well fucking leave...you might not be that hot without all those structured advantages you had from your old perch.....
Mt.Kellett proves a steep climb for ex-Goldman partner
Tue Jan 19, 2010 2:03am EST
Related News
HONG KONG (Reuters) - The founder of Mount Kellett Capital is finding that not everything he touches turns to gold.
http://www.reuters.com/article/idUSTRE60I0Q520100119
This appears to be outright criminal behavior. Perhaps they were panicking, but we need to end this now before the entire world's economy is destroyed for the sake of the criminals.
www.RevokeTheFed.com
Tick tock tick tock tick tock.
The seconds, they are winding down.
I am Chumbawamba.
Audit the Federal Reserve and Shut the Bastards Down!!!
Jail all the thieving criminals BANKSTA's!!
Claw back their ill gotten gains.
If the Federal Gov't doesn't deliver justice soon their heads will be on pikes too.
Time is running out.
The people are fed up with the BANKSTER RACKETEERS and Corrupt Political Class in Washington.
RICO Law applies. Enforce them.
DOJ -- you sorry bunch sorry-ass incompetents. No Justice to be found in the Obama/Holder Justice Department.
Watch Tavakoli...it starts @12:20
http://tinyurl.com/yc273qb
If the truth is knocked over and no one is listening, did a lie happen?
While the job of the SEC may be to investigate the miscegenation between AIG and The Squid, that's not why MS. Schapiro was appointed
This administration can't afford to have that kind of investigation. Mary's job is to make sure that doesn't happen.
Hauling TurboTim in front of Congress is the circus part of managing the "petite bourgeoisie". His history makes him a ready made scapegoat.
At this point, the value of these hearings isn't to be found in raising expectations that concrete action will be taken against the prime actors in this criminality. After Obama, even the most credulous ingenue wouldn't expect action. Rather it lies in stoking the already seething rage so palpable in the citizenry. Only here lies the way out of the dilema: The anger of the people boiling over into massive demonstrations and strikes. The greatest public disservice possible today is the fostering of the illusion that some commission, some panel, or some reform instituted through corrupted parliamentary processes will fundamentally alter the pathology eating away at the heart of what was once our democracy. The bacillus has prevailed, the prognosis grave, and the patient in coma.
Well said crazy Russian. Is this our period of Glasnost before the fall?
Oh, and don't forget the Obama bank tax. That will get all the ill-gotten gains back so the middle class will be made whole. Not!
Your kind words are sincerely appreciated. It is but yet another chapter in the serial, good Commander.
As to the bank tax, this outstanding piece by Alan Nasser if you've not yet seen it:
http://www.counterpunch.org/nasser01152010.html
Oh! How incompetent. They've actually got caught. So..now that GS residue is all over the hands of the FED.. who is going to run the country? Or China, for that matter?
(Deep maniacal laughter) Ha Ha Ha..
US Does Not Have Capitalism Now: Stiglitz
"An awful lot of people are not managing their own money," Stiglitz said. "In old-style 19th Century capitalism, I owned my company, I made a mistake, I bore the consequences."
"Today, (at) most of the big companies you have managers who, when things go well, walk off with a lot of money. When things go bad the shareholders bear the costs," he said.
http://www.cnbc.com/id/34921639
Jack Welch being the premier CEO who managed to pull that off and is still masturbating himself on TV a hundred times a day.
What needs to happen is the combined intellects and insights of this site should produced a list of questions and email them to very member of the House Oversight & Government Reform Committee pleading that they ask these questions of Geithner et al.
I regret to bring up this elephant in the room, but can we please get our money back?? To what end is this investigation, unless the fraudulently taken funds are returned? When a crime or fraud is detected (remember that would require proving monetary damage + intent, which I think would be seen by the discrepancy in the prices paid versus trading prices and the hiding/erasing of the paper trail), the law attempts to set back the clock and reverse the crime as much as possible. In this case, CDS @40 means SocGen, Squid & friends hand over $30B as restitution + some damages prescribed for fraud.
Now given that there was a possible commission of a crime that would be another process for the group. It is a serious transgression, one which would be hard for the group to resist given the dire situation, but nonetheless a possible crime. I’m almost empathetic for the group, because without this midnight transfer, they might have failed. But that is no excuse, and history has proven that we can live without Bear Stearns and Lehman and the Squid is not our beating heart. In fact, if anything they may be holding the rest of us down, HFTing our markets to death, gaming every possible govt/bus relationship, and pursuing an agenda which often is at odds with the country’s best interest. I hate to advocate the demise of any US institution at all, but punishment will be called for at some point. And just like all the Lehman and Bear staff, the professionals will all survive somewhere else, but unless the Congress takes action to preserve integrity in our laws, our system and government, American people will reject the abuse. It may take another election for real change to be delivered, but eventually right will win.
In a larger sense, some people voted for Obama thinking 2009-2010 would only happen under a secretive Cheney-Bush administration, and certainly that would be true. So McCain would not have been any better. It’s hardly political within our limited context of both corrupt and corruptible politicians from which we can choose. Myself, I am exhausted and disillusioned that the country is always on the losing end every time. We elect an angel and he is corrupted in a flash. We elect a devil and he doesn’t scare off the enemy. What’s clear is some kind of real game-changer has to occur, and anarchy has failed again and again. So I wouldn’t propose some kind of alternative government structure.
Historically, when we have been at our best, the US has been on the leading edge of some kind of economic growth. In 1996-2000 the internet’s burgeoning advent had us forget the 1986-1992 bankruptcies. Much as I hate to admit it, Reagan’s tough love did shake us up from another economic crisis. And in 1960-75 we led with technology and social leadership. All of these moments had the US rising out of the ashes, when the foreigners were overtaking us. Indeed, now is a time like those, when we surprise ourselves.
Immediate reform is needed. The health plan, a climate plan, a military budget fix, a bank asset MTM rule, elimination of cheating in sports and school, drug law reform and a porn tax are all necessary. What’s more, we should outlaw HFT and put these geniuses back to earning money the hard way. I think a lot of people would also like to see their money back in the treasury where it belongs, so we will have to get back the squid’s CDS scandal money if only to prove that no one is above the law. In the end, I don’t think the squid will be rendered insolvent since they have $100B+. It will just be a deserved public spanking.
The bigger picture of our next act is a complete mystery. Maybe Obama has it in him. Maybe he is our black liberal Reagan. He is going to have to learn to do the hard things, not negotiate so everyone gets a fair deal, but deliver terms. If he starts treating himself like the President and dishing out orders like he should, he has a shot at being the answer. But right now he is mired in being practical. FDR was not practical. He told people what had to be done and they did it, no questions or ‘can I have another meeting’s? There are 3 years left and if Obama does not take the yoke, a leadership reversal will only delay the solution.
I have more to say but, this seems like too much already.
Anti-Semites come out of the woodworks!
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