American International Group

Tsy Pay Czar Wants $198M In AIG Retention Pay Reduced -Report

Tsy Pay Czar Wants $45M In Pledged AIG Repayments

Tsy Didn't Take Broad Look AIG Pay Packages

AIG Execs Only Returned $19M Of $45M In Pledged Repayments -Report

• Asian stocks were mixed Tuesday, with caution ahead of U.S. earnings.
• Bank of England likely to expand its bond-purchase program to $316B next month.
• China Vice PM: 3Q,4Q GDP to each grow higher on year vs. 7.1% in 1H 2009.
• China September passenger vehicle sales up 83.6% on year
• Contractors expect cuts in big weapon sales; Congress to vote on 2010 defense budget by month's end.
• Crude oil futures trade above $73/barrel, helped by a weak dollar, early strength in equities.
• German investor confidence unexpectedly drops as economy remains `fragile'

Did Comcast think it can poach the crack Power Lunch (no pun intended) CNBC team all on its own? Turns out the answer is a flat out no. According to Reuters not only will GE likely exit its Comcast venture within 4 years (apparently the Comcast deal is virtually a certainty now, much to the chagrin of the Squawk Box team et al), but others media conglomerates are also considering getting involved in what could soon become a heated bidding war for the ample assets partially hidden by variousgrotesquely stretched sweaters.

A California Court case is headed for a resolution. It looks like AIG is the loser. But that means the taxpayers will suffer. If the case is overturned then the taxpayers will suffer. Another no win situation for the folks writing the checks.

The last part of the Max Keiser interview with Janet Tavakoli. All relevant topics covered.

By using our balance sheet, the Federal Reserve has been able to overcome, at least partially, the constraints on policy posed by dysfunctional credit markets and by the zero lower bound on the federal funds rate target. By improving credit market functioning and adding liquidity to the system, our programs have provided critical support to the financial system and the economy. Moreover, we have carried out these programs responsibly, with minimal credit risk and with close attention to the exit strategy. Our activities have resulted in substantial changes to the size and composition of our balance sheet. When the economic outlook has improved sufficiently, we will be prepared to tighten the stance of monetary policy and eventually return our balance sheet to a more normal configuration. - Chairman (or is that Printman) Ben Bernanke

FHFA's new top cop spoke before the Senate Banking Committee. Strong words. None of them sounded so good to me. Those that think that America's RE and mortgage crisis are behind us should read this. It will get worse before it gets better according to DeMarco. The good news is that he promised the problems at his Agency will come up for discussion before the end of the year. This is going to get interesting.

Spreads are mixed in the major indices today as single-names lagged any underperformance intraday and credit notably underperformed equities all day. Aside from very early trading tights in IG12/13, the on-the-runs were unable to break yesterday's tights (while SPY managed to gap up and hold well off yesterday's highs). Intraday ranges in IG and HY remained very muted again despite a pick up in volumes (as talk was of elevated activity in rolls and curves once again).

"In November 2008, Chinese banks said they would no longer play by our rules. Top tier banks (Bank of China and Industrial and Commercial Bank of China) reneged on derivatives contracts. They failed to come up with billions in collateral on dollar/yen FX trades, which were out of the money after the yen’s October appreciation. This should have been headline news in every financial newspaper, but it wasn’t." - Janet Tavakoli

"Meanwhile, every 20 milliseconds "HFT-Quants" are taking another "too-dumb-to-stop-trading" little investor trapped in the illusion that Fannie, Freddie and AIG will "be worth something, someday." "HFT-Quants" don't think long term. Their algorithms think in milliseconds, just enough time to skim more money from all the 'dumb money' out there." Paul Farrell, MarketWatch

• Apartment vacancies in the U.S. rose to 7.8% - a 23-year high.
• Asian stocks rise on US Services Industries data, higher commodities prices.
• Australia raised its cash rate target by 25 bps - first Group 20 to unwind stimulus.
• Dollar weakens as newspaper says Gulf States may drop greenback for oil trades.
• European, asian stocks advance; BHP Billiton, Dexia, Adidas shares climb
• Gartner sees narrower '09 chip revenue fall but cuts '10 forecast.
• Gold inches up towards $1020 on weak dollar

Spreads were tighter in the US today as all the indices improved (amid low volume and small intraday ranges as HY outperformed IG notably) with single-names generally following the indices lead (and performing in line with their weightings except AIG/ILFC which modestly outperformed). IG remained wide of Thursday's tightest levels while HY is now trading tighter than those tights as we note HY ebullience since the gap weaker open on Friday seems very blinkered (SPY is +2.3%, IG +0.65%, and HY +3.9% from that open).

"If you reduce the increasingly difficult situation facing the largest banks down to its essence, the problem is politicians picking winners and losers. If we don't have losers in our economic life, then there are no winners either. If we don't resolve troubled banks, then all of our banks will be bad, as the century-old Whithers quote above suggests. And the fact that Washington will not let large, mediocre institutions such as BAC fail means that our entire financial system is getting sicker, not recovering as the politicians ask you to believe. The different financial and operational situations facing BAC and other members of the large bank peer group illustrate the point." - Chris Whalen

Experts say that the economy will not recover until trust is restored.

So how do we restore trust?