Skip to comments.Watch AIG's payouts, not the bonuses, Spitzer says
Posted on 03/19/2009 9:03:40 PM PDT by Professional
"Bonus is a real issue. It touches us viscerally," Spitzer said. But he added, "The real money and the real structural issue is the dynamic between AIG and the counterparties."
"Virtually all" of the $80 billion-plus in the initial AIG bailout went to the company's counterparties, including nearly $13 billion to investment bank Goldman Sachs alone, Spitzer said.
(Excerpt) Read more at cnn.com ...
AIG and the GOVT is a smokescreen, and the "bonuses" is meant to feed the idiot masses. Stealing Employee Pay is another example of what our fine govt is like today too...
Right now, if I was an AIG employee, I’d be inclined to walk out, walk off the job.
In many key positions, this is the equivalent of the airline pilot walking away in mid flight.
Think Spitzer is mad about being thrown out?
He certainly isn’t toeing the party line nowdays.
His effort to “restore” himself, could reveal some interesting things. The media meanwhile will dismiss him as the pervert or whatever. Freepers falling for it hook line and sinker too it appears.
I’d listen very carefully what he has to say, now that he does not have power, or conflicts of interest. He sees the truth now, as a way to rebuild himself.
AIG placed bets and lost. We paid off the bad bets.
There are two elements involved that made this a “crisis”:
1. Paulson’s buddies were set to lose money, money for nothing and they weren’t going to go home wihout it...Hank saw to that.
2. There is a rumor that certain pension funds were involved with these high stakes bets...pension funds belonging to highly placed parties and vote critical groups...parties like congress and teacher’s unions. This is a whispered little rumor that slips around in the backwoods of the internet.
You’re right. Paulsen used AIG to save Goldman Sachs, that is plain to see. While Geithner is just a plain idiot, Paulsen is a traitor. On the other note, with the new 90% tax rate effectively capping compensation at $250,000 for AIG, Citi, BoA, Goldman, etc, there hasn’t been much talk what happens to the tax base of NYC. New York will become the new Michigan, and NYC the new Detroit.
Just like the bonuses are a smoke screen to AIG's larger problems. AIG is a smoke screen that keeps attention off of Freddie and Fannie and the Community Reinvestment Act. The government fell down from a regulatory standpoint - no doubt. But, this raging fire started with bad paper written to people who couldn't pay it back, even in a great economy.
Lastly, it's hard to comment on Spitzer. I do happen to think that he had target on Hank Greenberg and that it was largely personal. I believe that if Greenberg had still been with AIG, we may have avoided many of the problems that we're now dealing with. That's Spitzer's fault.
You think Congress will tax GS 90%, then let the state take the last 10%? Yeah, I doubt that too....
You may find this post very interesting as well. I found if fascinating,
What kills me, is that congress acted that fast on some pissant bonus issue, but meanwhile.
Naked shorting, was never dealt with. Uptic rule still not in place. Mark to market still not dealt with. Meanwhile the US Govt is stealing equity ownership of US Corporations being called a “bailout”.
Even Carter didn’t steal Chyrsler from the shareholders!!??
Spitzer is still pond scum because he was part of the problem.
In 1998 LTCM nearly took the world down. LTCM compared to what had been amassed by 2007 was a chumps chump change. Hedge Funds are clearly the most evil and dangerous financial undertaking in human history. And even now, after all this, nothing is being done.
I suspect, that what is at hand, goes as follows.
Hedge Funds get unlimited leverage, preferential tax treatment, and lack of regulation. They pay for this.
They pay for the removal of the uptick rule.
In collusion they work to go after stocks and industries systematically.
They blame all this on Bush, and the Republicans.
The stupid public votes for Obama.
The Hedge Funds have made trillions.
With fear everywhere, the Obama admin gets stimulus package, that is just political payoffs.
Obama administration fixes what they know is broken.
Hedge funds go long, instead of short.
Markets go up, hedge funds make trillions more, Obama is the hero for “saving” the day.
End of story.
All of that is absolutely true.
I understand that FASB is in the process of easing some mark-to-market restrictions which may ease some balance sheet pressure. But, it's just a little too late. I'm mad at the GOP because for six years they had an opportunity to really reform the US financial oversight bodies. They didn't. And, I'm not in the Limbaugh crowd of "all regulation is bad regulation" - not at all. But, bad regulation or poor enforcement of good regulation is a recipe for disaster, and I don't see anyone proffering any good ideas on how to improve, not destroy what we have.
This populace wave is very dangerous. Obama is going to use it and our economic system will be much worse off for it.
I really don’t care, just how scummy anyone is, when I’m searching for the truth. This is why the DEA, justice system have informants. The scum actually know the details...
This is also why Joe Kennedy was involved in fixing the stock market, created the SEC in the 30s. He broke it, and he knew how to fix it...
Spitzer’s trumped up pogrom against the Greenberg family is what caused the removal of the Greenberg family's steady hand at the top of the AIG structure. It wasn't until after Spitzer had collaborated with AIG insiders to remove Hank Greenberg and install the insiders to the head of the Group did the shysters in the Financial Products take control of the corporation and expand the hedge fund and gearing of the AIG group contracts.
I think you’re wrong. Look at my timeline of activities above. Power and money are the goal.
The bad guys have gotten all the power and money they need, and will make even more money when they fix it. Not only that, they will be more powerful as they become the accomplished messiahs who saved the world. My god, doesn’t anyone get it??????????????????
In a few months, you’ll scratch your head as the headlines read.
Banks Make Historic Profits
Go to Google, and read the accounts of what happened at the m2m meetings. Unified support, anxious, demanding....
Forget spitzer, forget madhoff, forget aig...
Behind the smoke screen you have the Democrats, Goldman Sachs, Soros, and the Hedge Funds. Man, I must say I’m incredibly impressed with how clever they are. Because it is working like a F’n charm.
The real bad guys, are happy that you’d clutter the truth with that diversion.
Hardly a happier person than me, when Spitz went down. But that was a different issue. Spitz knew the right thing, but appreciated money and power far more than that. When he no longer served his purpose, the POWERS THAT BE destroyed him, and made him so toxic that nobody, not even a smart freeper could see straight...
Remember that Spitzer’s NY AG office cut a deal with the AIG SVPs and corporate board to oust Greenberg, even though the SVPs then increased Cassano’s influence on the AIG Group.
Politics from all over, right here
Did Cassano And AIG Commit Fraud?
AIG chief Edward Liddy endured his anticipated ritual flaying today by Capitol Hill lawmakers angered by those bonuses. But, as Josh has been writing about over at TPM, theres mounting evidence that some current and former AIG execs could have much more to fear than angry questions from Gary Ackerman when all is said and done.
Since at least June 2008, the Justice Department has been investigating (sub. req.) whether AIG intentionally and criminally overstated the value of its credit default swaps, hiding its dire position from investors and government regulators. Joseph Cassano who during the period at issue ran AIGs financial products unit, AIGFP, which made those disastrous swaps, out of a London office has reportedly hired a lawyer in connection with that investigation. Britains Serious Fraud Office is said to be on the case as well.
So here at TPMmuckraker, weve spent much of today taking a close look at the reams of evidence contained in news reports, documents submitted to congressional investigations, SEC filings, and civil lawsuits filed by AIG shareholders one of which charges that Cassano hid AIGFPs ballooning exposure from public markets and short-circuited alarms within the AIG organization. And from this mass of data, a clear picture emerges in which Cassano aided by other AIG execs, who appear to have given his AIGFP unit broad autonomy within the company repeatedly downplayed the risks his unit faced, publicly painting a rosy picture that was at odds with reality. Perhaps most egregiously, he actively shut out voices primarily those of AIGFPs own internal and external accountants that highlighted potential problems at the unit.
Heres a rough, and far-from-comprehensive, timeline of events that begins to suggest a level of deliberate fraud and deception on a level that goes beyond whats generally been acknowledged so far.
- 2004: AIG pays $80 million to settle criminal charges brought by the Justice Department against Cassanos unit, AIGFP. The unit had been charged with securities fraud for allegedly helping PNC Financial improve its reported financial results by shifting about $750 million in assets off PNCs balance sheet, in return for lucrative fees. AIG admits to engaging in transactions that violated accounting rules, and signs a deferred prosecution agreement with DOJ, meaning it has to be on its best behavior to avoid charges. The episode suggests that Cassano and AIGFP were, at best, happy to cut corners in the pursuit of profits. (Wall Street Journal, June 2008)
- Late 2005: AIGFP execs, worried about loosening lending standards in the subprime-mortgage market, decide to stop selling credit protection on certain swaps, partly due to concerns that the model was not going to be able to handle declining underwriting standards, according to one AIG risk expert. In other words, Cassano and his colleagues were aware of the risk even at this early stage. (Wall Street Journal, October 2008)
- Mid 2007: Cassano is still providing assurances that AIGFPs accounting is on the level. Referring to the PNC episode from 2004, Cassano says publicly: We made some mistakes in those transactions and we suffered dearly for that [T]hat was the only accounting driven transaction weve ever done. Cassano added that AIGFP had instituted new controls to prevent a recurrence of the problem. (Investor lawsuit, found online via Google cache)
- Aug 9, 2007: Referring to credit default swaps, Cassano tells investors: It is hard for us, and without being flippant, to even see a scenario, within any kind of realm of reason that would see us losing $1 in any of those transactions .we see no issues at all emerging. We see no dollar of loss associated with any of that businesss. (Investor lawsuit)
- Aug 13, 2007: Summarizing those comments, the Wall Street Journal reports: Exotic financial instruments linked to subprime mortgages are showing huge losses in debt markets and weighing on companies from lenders to banks to insurers. But not at American International Group Inc. or so its executives say. In other words, Cassanos representations to investors achieved their goal of reassuring the press and public that AIG was doing fine. (Wall Street Journal, August 2007)
- August 2007: Cassano berates Joseph St. Denis, AIGFPs in-house accountant, for discovering accounting irregularities in a target companys hedge accounts. St. Denis had been brought in specifically to address problems in AIGFPs accounting cited by an auditor. (Letter from St. Denis to House Oversight committee)
- Sept 2007: Cassano tells St. Denis: I have deliberately excluded you from the valuation of the Super Seniors [ CDS’s] because I was concerned that you would pollute the process. St. Denis later told Congress he had no involvement in the process of valuing the CDS portfolio, because Cassano worked to exclude him from that process. (St. Denis letter.)
- Oct 2007: St. Denis resigns. He would later explain to Congress: I resigned because on multiple instances beginning in the late summer of 2007, Mr. Cassano took actions that I believed were intended to prevent me from performing the job duties for which I was hired. (St. Denis letter)
- Nov 6, 2007: Michael Roemer, AIGs chief auditor, informs the firms audit committee of the reasons St Denis gave for his departure. (St. Denis letter)
- Nov 29, 2007: Accountants for PriceWaterhouse Coopers (PWC), AIGs outside accounting firm, inform AIG CEO Martin Sullivan of their belief that the company has material weaknesses related to the credit default swaps, which could result in future errors on income statements or dislcosures. PWC later said that AIG was not interested in fully understanding the impact of the collateral disputes that at this point had been set off with AIGs counter-parties. (Investor lawsuit)
- December 2007: Cassano, preparing for an upcoming presentation to investors about potential losses associated with the credit default swaps, tells PWC accountants not to interfere. (Investor lawsuit)
- Dec 5, 2007: At that meeting, Sullivan and Cassano assure investors that everythings fine. Sullivan: AIG has accurately identified all areas of exposure to the US residential-housing market we are confident in out markets and the reasonableness of our valuation methods. Cassano: It is very difficult to see how there can be any losses in these portfolios. These statements, in particular, would later be looked by federal investigators as evidence of possible fraud. (Investor lawsuit)
- Jan 2008: In an audit opinion included in an SEC filing, PWC accountants write that AIG did not maintain effective internal control over financial reporting related to its credit default swaps. They assert that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. (AIG SEC filing).
- Feb 26, 2008 In what appears to be an effort to absolve itself of responsibility, PWC accountants declare at an Audit committee meeting, that AIGFP alone conducted the process of valuing 4th quarter assets. (Investor lawsuit)
- Mar 31, 2008: Cassano retires with million dollar a month consulting contract and a $34 million golden parachute. According to one investor lawsuit filed in January, Cassano had earned $280 million over the previous 8 years more than AIGs CEO. (Investor lawsuit).
- June 13, 2008: In a statement put out in response to news of the DOJ investigation, AIG declares, As is the case throughout AIG, our colleagues [in the financial-products division] have been rigorously focused on transparency and accuracy in all its disclosures. The goal is clear: make sure the numbers are right, whether its good news or bad news. (Wall Street Journal, June 2008)
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Posted in: TPM | 18 March 2009 | by: admin #19436