Skip to comments.Fed Secrecy Claims Bogus, Redacted AIG Bailout Details Already Public
Posted on 01/22/2010 4:37:32 AM PST by TigerLikesRooster
Fed Secrecy Claims Bogus, Redacted AIG Bailout Details Already Public
By Thomas Adams, an attorney and former monoline executive, and Yves Smith
In September 2008, the Federal Reserve bailed out AIG, and ever since then, controversy has swirled around the motivation and terms of the bailout. A major part of the bailout funds went directly to three banks: Goldman Sachs, Merrill Lynch, and the French bank Société Générale (SocGen). These banks were holding CDS insurance from AIG on toxic assets, and the bailout saved them from the damage they would have suffered if AIG had gone bankrupt and that insurance had become worthless. The assets in question were then stuffed into a financial vehicle called Maiden Lane III, where they remain to this day, administered by BlackRock on behalf of the government.
The bailout has raised enduring questions about the propriety of US financial system governance. A recent article in Frances leading newspaper Le Monde Diplomatique highlighted the two main theories currently circulating on why the bailout was so generous to a small group of banks. One idea holds that the political connections of Goldman Sachs were a key reason for the bailout. At the same time, it appears that the French regulatory authorities intervened on behalf of the French banks SocGen and Calyon by claiming (speciously) to the Fed that those bank directors would face prison time if they accepted anything less than a 100% bailout.
Attempts to investigate have slammed into a wall of secrecy. The Fed is still fighting Freedom of Information Act requests to disclose the beneficiaries of its various emergency rescue programs The central bank has refused to release details about how the banks benefited from the AIG bailout, even taking the impressively circuitous route of getting AIG itself to beg the SEC for.....
(Excerpt) Read more at nakedcapitalism.com ...
Maiden Lane III, ping!