A Tax Cheat's Last Stand
From Tim Geithner's testimony, presumably not prepared on TurboTax. Presented without commentary but with some bolding.
The steps the government took to rescue AIG were motivated solely
by what we believed to be in the best interests of the American people.
We did not act because AIG asked for assistance. We did not act to
protect the financial interests of individual institutions. We did not
act to help foreign banks. We acted because the consequences of AIG
failing at that time, in those circumstances, would have been
catastrophic for our economy and for American families and businesses.
The government has not yet repaired all the extensive damage caused
by this crisis. For every American out of work, for every family facing
foreclosure, and for every small business facing a credit crunch, this
recession remains acute. But everyone should realize that because of the
actions of the Treasury and the Federal Reserve, the American financial
system is now in a position where it can provide the credit necessary
for economic growth, not stand in its way. That is an important
achievement necessary to lay the foundation for job growth and long-term
The situation of AIG today is substantially better than it was six
or twelve months ago. AIG's insurance subsidiaries are open for
business and generating positive returns. A number of those
subsidiaries are attracting attention from external investors. We
anticipate that AIG will generate substantial proceeds from the sale of
some of those entities. Under the terms of the support we have provided,
the first call on the proceeds from any sales of AIG's subsidiaries will
be to repay the support that the U.S. government has provided to AIG.
AIG has made substantial progress in winding down its Financial
Products subsidiary, the division where AIG's problems were
concentrated. The gross value of AIGFP derivatives positions are down by
more than half since September of 2008 and the company actually
generated a profit in the last two quarters for which public information
Our latest audited financial statements show that, as of September
30, 2009, Treasury had invested $43 billion in AIG under TARP. At that
time, our estimate of the "market value" of that investment was $13
billion. We believe that, depending on market conditions and the future
performance of AIG's businesses, the actual recovery on the Treasury's
investment could be significantly higher. Moreover, we are confident
that the FRBNY Credit Facility, its loans to Maiden Lane II and Maiden
Lane III, and its preferred interests in certain of AIG's subsidiaries
will be fully repaid.
There are two central lessons from this crisis, both applicable to
AIG, that have guided the President's proposals and the legislation now
working through Congress to reform our financial system.
First, we need the ability to limit risk-taking for institutions
that threaten the overall stability of the system and can cause
extraordinary damage to the American economy. We need this ability not
just for banks, but for institutions that operate like banks. These
non-bank financial institutions have existed alongside banks and yet
were not subject to those constraints in this crisis. We also need to
make sure that regulators have clear accountability and enforce
sensibly-designed constraints on risk.
Second, the federal government must have the ability to resolve
failing major financial institutions in an orderly manner, with losses
absorbed not by taxpayers but by equity holders, unsecured creditors
and, if necessary, other large financial institutions.
Today, we know that when confronting a severe economic crisis the
government must respond with overwhelming force. That is the basic
lesson of the Great Depression. That is the basic insight that informed
every judgment we made. And that is the reason we are now emerging from
a recession and not still in the midst of a second Great Depression.
Remember: Do your citizen's duty - burn a Benjamin with overwhelming force, max out your credit card in the midst of America's latest Golden Age (cause the Conference board said so), buy 10 Kindles, quit your unemployed status, garnish Goldman with 80% of your wages (scratch that, you already do), support Team TurboTaxTreason and vote for change!
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