http://www.huffingtonpost.com/david-sirota/geithner-after-helping-go_b_415166.htmlWay back in May of 2009, I said President Obama needed to fire Treasury Secretary Tim Geithner because he was either lying or incompetent when it came to AIG. Per the norm, I was lambasted as part of the supposed fringe for saying this. Now, while I'm not going to say "I told you so," I will say it's become more acceptable to say Geithner must be fired - especially after a new report that Geithner's New York Fed instructed AIG to refuse to disclose to SEC regulators some of the worst financial shenanigans surrounding the AIG bailout.
For some history, the New York Fed, headed by Tim Geithner, bailed out AIG and then had the company famously pay back its creditors at 100 cents on the dollar. These creditors were huge banks that were taking big risky bets on mortgage-backed securities, and then buying "insurance" from AIG (more on this concept of "insurance" in a second) on potential losses on those bets. When the mortgage-backed securities lost their value in the housing bubble collapse and they called in their insurance, AIG was about to go under, until the New York Fed swept in.
If AIG had gone into bankruptcy like a normal corporation would have, there's little chance its creditors would have been paid back at 100 cents on the dollar. A bankruptcy judge or AIG shareholders/executives would have negotiated a much lower reimbursement rate. But because it was taxpayer money on the line, and because politically influential banks like Goldman Sachs can influence the government officials who made those reimbursement decisions*, AIG paid them in full with our taxpayer dollars. Put another way, the decision to pay back AIG's creditors in full with taxpayer cash was a massive giveaway/sweetheart deal to the big banks.
-snip-
Now, if that sweetheart deal wasn't bad enough, we find out yesterday from Bloomberg News that the New York Fed instructed AIG executives to withhold information from the SEC about those sweetheart deals so as to prevent the public from finding out about them:
-snip-
To understand how grotesque this really is, consider it in terms of the movie Wall Street - specifically, the end of the movie when the SEC is actively investigating into Gordon Gekko. Imagine that when SEC investigators strung up Bud Fox with a wire, the New York Fed - another branch of government - strung up Gekko with a ear piece, with Tim Geithner or one of his aides on the other end telling Gekko how to answer Fox's questions so as to not disclose damning information. Now imagine that Gordon Gekko is the entire AIG corporation.
Was the New York Fed's behavior legal or were they encouraging AIG to commit a criminal fraud? I'm not a lawyer so I don't know - but it sure seems like it could be, or at least should be. Either way, it's appalling to learn that one government agency was actively encouraging a private corporation to withhold information from another government agency, so as to prevent the public from finding out information (in this case, a sweetheart deal to huge banks) about the public's money - information that would seriously piss the public off.
The same man who orchestrated this is now heading the Treasury Department - the agency that is supposed to also be regulating banks. This is far more than a fox-in-the-henhouse situation - this is a Gekko-in-the-Treasury situation. And if it's not grounds for firing Geithner, then there are really no grounds to fire any government official for anything.
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
