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Author Topic: "Fed Cover-up Surrounds Goldman/AIG Scandal"  (Read 1407 times)
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WhiskeyGirl
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« on: February 23, 2010, 05:07:35 PM »

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Two weeks after I wrote a commentary (“The Goldman Sachs/AIG Saga”) observing that it appeared that Goldman Sachs  had intentionally scammed AIG by getting it to underwrite “credit default swaps” - which it knew would blow up and provide huge profits for Goldman – it appears that some members of the U.S. government are now reaching the same conclusion.

To add to this scandal, new information publicly released today indicates that the Federal Reserve was heavily involved in a cover-up – where it appears that the Fed also knew that Goldman Sachs was ripping-off AIG with those CDS contracts. More specifically, it was then-president of the New York Fed, Timothy Geithner, who a) ordered AIG to pay-out 100 cents on the dollar on these scams; and then b) ordered AIG to cover-up how much it had paid out on those contracts as well as all information on the recipients of those windfall-billions.


I had previously assumed that Geithner had been promoted to Treasury Secretary because he was a confirmed tax-cheat, who had slept through his entire tenure as president of the New York Fed (and Wall Street's chief regulator). I was wrong. Obviously, the banksters of Goldman Sachs awoke Geithner from his slumber in 2008 – and gave him his marching orders: turn AIG into a giant “slush fund”, so that the banksters could get 100% pay-outs in fleecing AIG on its CDS contracts. It was Geithner's ability to follow those orders (and funnel more than $10 billion directly into Goldman Sachs' coffers) which allowed him to inherit the job of Treasury Secretary from Goldman Sachs' former CEO: Hank “Bazooka” Paulson.

http://www.benzinga.com/136944/fed-cover-up-surrounds-goldmanaig-scandal
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WhiskeyGirl
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« Reply #1 on: February 23, 2010, 05:11:36 PM »

Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs

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A potentially more important development slipped by with less notice, Bloomberg Markets reports in its April issue. Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG.

These were the deals that pushed the insurer to the brink of insolvency -- and were eventually paid in full at taxpayer expense. The New York Fed, which secretly engineered the bailout, prevented the full publication of the document for more than a year, even when AIG wanted it released.

That lack of disclosure shows how the government has obstructed a proper accounting of what went wrong in the financial crisis, author and former investment banker William Cohan says. “This secrecy is one more example of how the whole bailout has been done in such a slithering manner,” says Cohan, who wrote “House of Cards” (Doubleday, 2009), about the unraveling of Bear Stearns Cos. “There’s been no accountability.”

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The document Issa made public cuts to the heart of the controversy over the September 2008 AIG rescue by identifying specific securities, known as collateralized-debt obligations, that had been insured with the company. The banks holding the credit-default swaps, a type of derivative, collected collateral as the insurer was downgraded and the CDOs tumbled in value.

The public can now see for the first time how poorly the securities performed, with losses exceeding 75 percent of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs in the first place.

The banks should have to explain how they managed to buy protection from AIG primarily on securities that fell so sharply in value, says Daniel Calacci, a former swaps trader and marketer who’s now a structured-finance consultant in Warren, New Jersey. In some cases, banks also owned mortgage lenders, and they should be challenged to explain whether they gained any insider knowledge about the quality of the loans bundled into the CDOs, he says.

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“It’s almost too uncanny,” Calacci says. “If these banks had insight into the underlying loans because they had relationships with banks, originators or servicers, that’s at the least unethical.”

more here - http://www.businessweek.com/news/2010-02-23/secret-aig-document-shows-goldman-sachs-minted-most-toxic-cdos.html

Anyone surprised?
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WhiskeyGirl
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« Reply #2 on: February 23, 2010, 05:16:51 PM »

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A New Wrinkle In The Goldman-AIG CDO Mess

Bloomberg breaks more news today about the ongoing fiasco involving Collateralized Debt Obligations (CDOs), Goldman Sachs, AIG, the New York Fed and Rep. Darrell Issa (R-CA). Documents finally released from the NY Fed after about a year indicate that Goldman Sachs created more of the toxic CDOs insured by AIG than any other bank, which played a part in AIG's troubles and eventual bailout. Those securities were so bad that they sometimes had losses exceeding 75% of their notional value, according to Bloomberg. If Goldman and other banks knew these securities were garbage, should they explain why they asked AIG to insure them? Not necessarily.

http://business.theatlantic.com/2010/02/a_new_wrinkle_in_the_goldman-aig_cdo_mess.php
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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