Geithner Defends Terms of AIG Bailout

[IDemo]

Source: ABC News

Former top regulator Timothy Geithner defended terms of the U.S. government's bailout of American International Group Inc., saying Wednesday that the insurance giant's exceptionally risky behavior had caused losses that called for strict treatment.

The terms included a huge government stake in the company and an interest rate called "crazily high" by a government official.

Geithner headed the New York Federal Reserve when it extended an $85 billion rescue loan to AIG in September 2008 as the company veered toward collapse.

In trial testimony, Geithner said he and his colleagues at the Fed and the Treasury Department believed that AIG's dire financial condition was "substantially" the result of its management taking on excessive risk.

Read more: http://abcnews.go.com/Business/wireStory/geithner-defends-terms-aig-bailout-26052581

[Autumn]

1. Of course he would, bless his little heart.

[beemer27]

2. And

What happened to the execs who dreamed up these risky ventures and invested other peoples money in them. If the taxpayers bailed the company out, the taxpayers should own the company and install smarter leadership. Does anyone want to bet that the people who ran the company into the ground are still around, and still getting monster salaries and bonuses? Whoever came up with "too big to fail' should have to answer for all the tax money that has been pissed down a hole to bail out these thieves. Both parties had a hand in this, and there are many questions that they need to answer.

[jtuck004]

4. "...What happened to the execs who dreamed up these risky ventures" < Those banks are reporting

record profits, and are the beneficiaries of $1.35 trillion dollars a year still being paid into the coffers from which these friends of this administration dip their thieving, greedy fingers into for profit.

At the expense of opportunity for working people.

Which is why American voters on Jon Stewart's show laughed in Timothy McVeigh's..., I mean Geithner's (I get my killers mixed up), face when he tried to spin that this was good for the country, as Stewart pointed out that it was mostly only good for a few wealthy people, and harmful, (note: was even fatal for a few), for a great many others.

[onethatcares]

3. what was this crazy high interest rate

he's talking about? Do we, as a government, still have a huge stake in this company or are we all nicey/nicey with it?

oh, never mind, it was 12% which was reduced later to a figure we'll never hear about.

I cringe everytime I see the AIG logo come up on the telly.

[bhikkhu]

6. AIG made the last repayment in 2013, including 27 billion in interest on the loan

http://www.cnbc.com/id/100397698#.

I still think the whole deal was preferable to letting the company default, where the shareholders would have lost everything, 116,000 employees would have been out of work, and ripple effects could have made the recession worse. Not to apologize for the bozos that ran it into the ground, but its a lesson in how government involvement can turn a company around and successfully bolster the economy.

Many other things could have been done if congress were more cooperative, or perhaps if there was more imagination at the top, but the AIG bailout is one that worked.

[Hotler]

7. Plain and simple, people should be in prison for what they did.

The banks should have been broken up. Maybe what was needed was for the recession to get worse and then the people would get really pissed off and take to the streets in the thousands and demand that rules be put back in place to keep that shit from happening again and put the fear of got into the banksters.

[bhikkhu]

8. If Obama made the recession worse, rather than turning things around, what would 2010 have been?

Even with people in the streets, its still a democracy. We could have lost congress and the senate on legitimate claims of incompetent leadership, and would have certainly seen an impeachment attempt. If the recession were not handled well, and quickly, I think the RW would have been right back in business with a pretty strong hand. IF you take a good look - that was their playbook from the beginning of Obama's presidency.

[brentspeak]

9. Yeah, because of course there would have been a recession

had bankers been prosecuted as they should have.

Not surprising that you posted a CNBC link.

[bhikkhu]

13. AIG is an insurance company, not a bank

and it was a matter of letting it collapse or not. Same deal with GM, which worked out well too.

[brentspeak]

18. I didn't say AIG was a bank

Fail on your part.

"Same deal with GM, which worked out well too."

The GM bailout was used by a coalition of vulture funds, led by GOP sugar daddy Peter Singer, to directly extort US taxpayers for a chunk of bailout funds, and then to ship almost all Delphi jobs overseas to China.

By "working out well", are we to presume that you profited off the scam, too?

[Major Hogwash]

15. "The fundamentals of the economy are strong."

That was the refrain that the GOP repeated during the month of October in 2008 while 750,000 Americans were losing their jobs that month, just like the month before, and for several months after, as well.

Senator McCain wasn't the only one who repeated that meme, by the way.

Republican Governor Butch Otter, who was the Republican Governor of Idaho in 2008 also repeated that very same lame bullshit meme in an interview he gave while running away from the reporter who asked him about the financial crisis that had just erupted in public.
Otter told the reporter that after she had cornered him at one of his political rallies because it was just 1 month away from the 2008 election, and Otter wanted soon-to-retire-to-never-be-heard-from-again Senator Larry Craig's seat in the U.S. Senate to remain in Republican hands, even though Otter himself was not running for re-election that year.

Of course, it is also true that many bankers did go to jail as a result of that crises, and several banks paid huge fines.

[brentspeak]

17. "Of course, it is also true that many bankers did go to jail as a result of that crises"

Name the bankers who went to jail.

[freshwest]

16. 116,000 plus the ripple effects. Wouldn't have led to a revolution, but misery and some deaths.

For some those people would be collateral damage on the road to a promised utopia. I'm glad they and their families weren't left as a sacrificial offering. AIG collapsing would have had global consequences, IIRC.

Gaithner was right to force them, and his first, most virulent attackers were from the GOP and the 1%. Same with the attackers of Dodd-Frank, who Warren said she'd sign again if given the chance. It is another thing despised, but mainly by the GOP and bankers who have tried to get it repealed. It has cost them a lot, not in money, but in how they run their business to save them further scrutiny.

Lust for revenge is not one of the Democratic Party's core values. It is, however, with the GOP, who have worked consistently to destroy Obama and other Democrats in every way they could. And the USA government, the social safety net that cares for many millions, along with education and science.

I agree with your post.

[L0oniX]

5. In an alternate universe ...Geithner Defends fraud.

[dmosh42]

10. Recognizing something had to be done to avoid default by AIG and others, I did understand the ...

government need to buy up their phony financial instruments(derivatives?) which were pretty much worthless at the time. But to give the full value at which they were purchased was rediculous, when he could have paid maybe 30% to keep them afloat. Then that allowed bonuses to be paid during the crisis, which showed this was just another fraud put over on the taxpayers. I'm sure Geithner never has to worry about his financial security in the future. Crime does pay!

[Octafish]

11. Tim Geithner, via the US taxpayer, made AIG whole, 100-cents on the dollar.

This should bother people who care about Banksters.

Timothy Geithner and AIG-Gate

The World’s Greatest Insurance Heist

by ELLEN BROWN
FEBRUARY 08, 2010
CounterPunch

EXCERPT...

Geithner has been under the House microscope for the decision of the New York Fed, made while he headed it, to buy out about $30 billion in credit default swaps (over-the-counter derivative insurance contracts) that AIG sold on toxic debt securities. The chief recipients of this payout were Goldman Sachs, Merrill Lynch, Societe Generale and Deutsche Bank. Goldman got $13 billion, roughly equivalent to its bonus pool for the first 9 months of 2009. Critics are calling the New York Fed’s decision a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been put through bankruptcy proceedings in the ordinary way. In a Bloomberg article provocatively titled “Secret Banking Cabal Emerges from AIG Shadows,” David Reilly writes:

(T)he New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve. This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

The beneficiaries of the New York Fed’s largesse got paid in full although they had agreed to take much less. In a November 2009 article titled “It’s Time to Fire Tim Geithner,” Dylan Ratigan wrote:

(L)ast November . . . New York Federal Reserve Governor Tim Geithner decided to deliver 100 cents on the dollar, in secret no less, to pay off the counter parties to the world’s largest (and still un-investigated) insurance fraud — AIG. This full payoff with taxpayer dollars was carried out by Geithner after AIG’s bank customers, such as Goldman Sachs, Deutsche Bank and Societe Generale, had already previously agreed to taking as little as 40 cents on the dollar. Even after the GM autoworkers, bondholders and vendors all received a government-enforced haircut on their contracts, he still had the audacity to claim the “sanctity of contracts” in the dealings with these companies like AIG.

Geithner testified that the Fed’s hands were tied and that the bank could not “selectively default on contractual obligations without courting collapse.” But if it was all on the up and up, why all the secrecy? The contention that the Fed had no choice is also belied by a recent holding in the Lehman Brothers bankruptcy, in which New York Bankruptcy Judge James Peck set aside the same type of investment contracts that Secretaries Paulson and Geithner repeatedly swore under oath had to be paid in full in the case of AIG. The judge declared that clauses in those contracts subordinating other claims to the holders’ claims were null and void in bankruptcy.
“And notice,” comments bank analyst Chris Whalen, “that the world has not ended when the holders of contracts are treated like everyone else.” He calls the AIG bailout “a hideous political contrivance that ranks with the great acts of political corruption and thievery in the history of the United States.”

CONTINUED...

http://www.counterpunch.org/2010/02/08/the-world-s-greatest-insurance-heist/

Now some AIG Friends of the Banksters are suing the government for violating their rights in getting rescued.

It's not supposed to be Bizarro World, but it is.

[librechik]

12. fuck you, Lord Geithner n/t

[alp227]

14. Bernanke has now testified...

A.I.G. Had No Better Offer, Bernanke Testifies in Trial

Ben S. Bernanke, a former chairman of the Federal Reserve, was not the most cheerful of witnesses on Thursday as he took the stand in the lawsuit over terms of the 2008 bailout of the insurance giant American International Group.

Mr. Bernanke gave terse and clipped responses to questions, many times just a “yes, sir” or “no, sir.” He affirmed that the global financial system had been on the verge of collapse in September 2008. He agreed that A.I.G.’s collapse would have been “basically the end” of the financial system, so connected was it to other parts of the financial world.

But Mr. Bernanke did not agree with the notion — a central part of the lawsuit — that A.I.G. got a raw deal from the Federal Reserve, or that it could have gotten a better deal elsewhere.

“It was evident from the fact that the board took the Fed’s offer that they didn’t have a better offer,” he said, referring to the vote by A.I.G.’s board approving the government’s loan, and its terms.

full: http://dealbook.nytimes.com/2014/10/09/a-i-g-had-no-better-offer-bernanke-testifies-in-trial/