Liars and Crooks and Thieves, Oh MY!

07 Jan

Today’s stories of the cover-up of the AIG payouts to the leading banks by then head of the NYFed (now Treasury Secretary!?) Geithner leave little to the imagination…

The head of our Treasury is a lieiing sack of turd but hey, America, it’s all good and we are in the midst of a recovery! Oh, er, well, uhm.. at least Goldman Sachs, Timothy, Ben, Ken Lewis and those folks are! Recovering, that is… From their decade long binge – slipping off quietly to maintain the front running of the markets to their own ends – Ah, but don’t be so harsh a judge. After all, they have you, the American Tax Payer in MIND. They do indeed – you are getting lined up for “Plan C” wherein the Fed and Treasury will quietly bail out the imploding 3Trillion dollar Commercial real estate collapse – and then use tax payers monies to fund paying off all the banks and their insider (read: each other) investors for the negative equity in all of the residential real estate.

Life is good in the promised land.

Very good indeed – for those in the top 3 percent… doncha know?

Thursday, January 7, 2010

Geithner’s dubious AIG cover up

By Edward Harrison of Credit Writedowns

Let me add a few words to Yves’ last post because I don’t think she was explicit enough about what’s going on here. This was looting and a cover-up plain and simple.

A quick review: Damaging e-mails have revealed that Treasury Secretary Timothy Geithner urged AIG to withhold crucial information about the deterioration of its financial condition in the lead up to its demise. This will put further political pressure on Geithner, who has already been exposed for his dubious role in the Lehman Brothers bankruptcy.

Bloomberg leads into the story saying:

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

These were not e-mails revealed willingly, but rather as a result of oversight and investigation. At issue is whether the 100 cents on the dollar payments by AIG to its credit default swap counterparties were a backdoor bailout. Most market watchers believe that AIG counterparties would have received significantly less on the free market, exposing them to tens of billions in losses instead of taxpayers (see CW story from March 2009 on this issue). So, in a very real sense, many believe taxpayers were defrauded by the government’s handling of the AIG affair. This latest revelation only adds to that belief.

Moreover, in regards to Tim Geithner personally, this revelation is extremely damaging. Not only did he, Paulson and Bernanke mishandle the Lehman bankruptcy which triggered the panic central to the financial crisis, but he has now been personally implicated in withholding – covering up, if you will – vital evidence on the looting of taxpayers to the benefit of financial companies, some of whom are not even domestic institutions. (See my definition of terms.) You have to see this in a negative light.

I would be remiss if I didn’t remind you that he had direct oversight responsibilities for money center banks as president of the Federal Reserve Bank of New York. In the past, in testimony before Congress he has denied that he was, in fact, responsible for these institutions, saying “I’m not a regulator.”

I’ve never been a regulator, for better or worse. And I think you’re right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.

Overwhelmed by regulation! It wasn’t the absence of regulation that was the problem, it was despite the presence of regulation you’ve got huge risks that build up.

This is just nonsense. Jo Becker and Gretchen Morgenson put it this way in April:

An examination of Mr. Geithner’s five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Street’s giant financial institutions.

His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.

In a pair of recent interviews and an exchange of e-mail messages, Mr. Geithner defended his record, saying that from very early on, he was “a consistently dark voice about the potential risks ahead, and a principal source of initiatives designed to make the system stronger” before the markets started to collapse.

Mr. Geithner said his actions in the bailout were motivated solely by a desire to help businesses and consumers. But in a financial crisis, he added, “the government has to take risk, and we are going to be doing things which ultimately — in order to get the credit flowing again — are going to benefit the institutions that are at the core of the problem.”

He was on the job when these firms levered up and took reckless risks that endangered our financial system. For him to absolve himself of responsibility is a disgrace. And to add insult to injury, we now learn that he urged a systemically important company to withhold evidence of his looting of taxpayers.

Tim Geithner must go.

To which I can only add: Tim is not the ONLY one who must go – They ALL must go!

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