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* Banks with influence got access to bailouts, more money U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday. Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business. Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received...

WASHINGTON — A top executive of American International Group Inc. has been granted a $4.3 million pay-package bump by the troubled insurance giant's majority owner — the U.S. government — because the executive has decided to remain with the company. Kenneth Feinberg, the Obama administration's pay czar, approved an AIG request to grant the executive a long-term compensation package that includes stock options with a current value of $3.26 million and an additional incentive award of up to $1 million. The package comes on top of the executive's 2009 base salary of $450,000.

CHICAGO (Reuters) – Goldman Sachs Group Inc (GS.N) played a bigger role in fueling the mortgage bets that crippled American Insurance Group Inc (AIG.N) than has been publicly disclosed, the Wall Street Journal reported on Saturday. An analysis by the paper of AIG's trades on pools of mortgage debt shows that Goldman was a key player in many, including those involving other banks, the Journal said. Goldman was one of 16 banks the U.S. government rescued last year after closing out losing trades that AIG had made with the financial firms. The bank originated or bought protection from AIG on...

Goldman Sachs Group Inc. played a bigger role than has been publicly disclosed in fueling the mortgage bets that nearly felled American Insurance Group Inc. Goldman was one of 16 banks paid off when the U.S. government last year spent billions closing out soured trades that AIG made with the financial firms. A Wall Street Journal analysis of AIG's trades, which were on pools of mortgage debt, shows that Goldman was a key player in many of them, even the ones involving other banks. Goldman originated or bought protection from AIG on about $33 billion of the $80 billion of...

Wall Street Titan's Role Shown in Journal Analysis; Firm Says Problems Hidden Goldman Sachs Group Inc. played a bigger role than has been publicly disclosed in fueling the mortgage bets that nearly felled American Insurance Group Inc. Goldman was one of 16 banks paid off when the U.S. government last year spent billions closing out soured trades that AIG made with the financial firms. A Wall Street Journal analysis of AIG's trades, which were on pools of mortgage debt, shows that Goldman was a key player in many of them, even the ones involving other banks. Goldman originated or bought...

It appears the only thing worse in this world than a measly $500,000 salary is getting no salary at all. And that's exactly what is about to happen to AIG General Counsel, Anastasia Kelly, who before joining the bankrupt firm, was a GC at such reputable organizations as MCI/WorldCon (sic) and Fannie Mae. To paraphrase the objections against a very prominent Treasury Secretary recently, the question is not whether or not she will leave the job, the question is how she got it in the first place. Kelly, who recently was protesting the $500k salary cap imposed by Pay Despot...

WASHINGTON – The Treasury Department is acknowledging for the first time that it lost $61 billion on two key programs designed to stabilize the economy after the largest financial crisis in decades. The government is losing more than $30 billion on lifelines extended to insurance giant American International Group Inc., according to Treasury data released Wednesday in an audit by the Government Accountability Office. It also is losing more than $30 billion on rescues of struggling automakers Chrysler and General Motors.

On Saturday, joined by hundreds of friends, family and colleagues on a snowy December day in Yonkers, NY, we celebrated the life of Mark Pittman. Readers of The IRA who wish to express their thanks to Mark and show support for his family may make contributions to the Pittman Children’s College Fund, c/o Dr. William Karesh, 30B Pondview Road, Rye, NY 10580. Bob Ivry from Bloomberg News gave a remembrance of Mark, including reading the letter that his daughter Maggie Pittman posted on zerohedge to dispel rumors that her dad might have been murdered. Some members of the zerohedge family...

When an insolvent American International Group distributed $165m in executive bonuses last winter, the public was outraged. But this was small change compared with what we have learnt recently from a federal auditor’s report on the US insurance group, almost 80 per cent owned by the US government. At the direction of the Federal Reserve Bank of New York, AIG quietly gave $62bn to pay in full the claims of Goldman Sachs, Barclays and other large investors. Why did US taxpayers pay so much to the sophisticated clients of AIG when we could have spent much less to settle these...

American International Group says it has slashed the amount of money it owes the government by $25 billion after moving two subsidiaries into special holding units ahead of their planned spinoffs or sale. How could this be? Didn't a Sanford Bernstein analyst just discover that AIG had a new $11 billion hole in its balance sheet? As it turns out AIG has reduced its debt to taxpayers without paying back a dime of the money it borrowed. Instead, it is just engaging in accounting chicannery to transfer the obligations to a pair of companies it is spinning off. The government...

Wow. The disaster at AIG keeps getting worse. Today a Sanford C. Bernstein analyst released a note on his discovery that the insurer has an undisclosed $11 billion shortfall in reserves to pay property-casualty claims. Todd Bault said that AIG may have cut back on its use of reinsurance and become too "aggressive" in pricing workers' compensation and professional liability policies. As a result, AIG would likely have to take a huge reserve charge before it could sell its Chartis property-casualty business. “AIG shareholders and the federal government face considerably more uncertainty than they may have anticipated,” Bault wrote. For...

(snip) I am concerned, however, that a number of the legislative proposals being circulated would significantly reduce the capacity of the Federal Reserve to perform its core functions. Notably, some leading proposals in the Senate would strip the Fed of all its bank regulatory powers. And a House committee recently voted to repeal a 1978 provision that was intended to protect monetary policy from short-term political influence. These measures are very much out of step with the global consensus on the appropriate role of central banks, and they would seriously impair the prospects for economic and financial stability in the...

More details on the appalling bailout of AIG. [Neil Barofsky's report on the AIG bailout is] must reading for any taxpayer hoping to understand why the $182 billion “rescue” of what was once the world’s largest insurer still ranks as the most troubling episode of the financial disaster. And it couldn’t have come at a more pivotal moment... [T]he actions taken in the deal by Treasury Secretary Timothy F. Geithner, who was president of the Federal Reserve Bank of New York at the time, grow curiouser and curiouser.

As we have been reading the latest coverage on the AIG bailout from the SIGTARP report and the Treasury Secretary Geithner’s Congressional testimony, a nagging question remains unresolved: why did AIG get bailed out but the monoline bond insurers did not? . . . I hate to get sucked into the vampire squid line of thinking about Goldman, but the only explanation i can think of for why AIG got rescued and the monolines did not is because Goldman had significant exposure to AIG and did not have exposure to the monolines. When it became clear that AIG could face...

Emailed to me by a contact in Congress. November 18, 2009 The Honorable Barney Chairman, House Financial Services Committee 2129 Rayburn House Office Building Washington, DC 20515 The Honorable Christopher Dodd Chairman, Senate Committee on Banking, Housing, & Urban Affairs 534 Dirksen Senate Office Building Washington, DC 20510 Dear Chairman Frank and Chairman Dodd: In light of Tuesday’s report released by the Special Inspector General for the Troubled Assets Relief Program, Neil Barofsky – Factors Affecting Efforts to Limit Payments to AIG Counterparties – we write to request your assistance in addressing major issues displayed prominently in the report. On...

Goldman may be the "most profitable" Wall Street firm but I will simply observe that it is trivially simple to be "profitable" when one does wrong, since it is always easier to make money by doing wrong than by acting with honor and propriety. No Lloyd, your apology is not accepted, as it is insincere. You are simply trying to deflect attention from the well-deserved hit to your reputation - a reputation that, from my perspective, is somewhere south of Satan's. Have a nice day Jackass and may you burn in Hell.

"Too big to fail" meets "Just the right size to steal from the taxpayers." Sounds like a horror movie - and believe me, if you read this piece by Jill Schlessinger at CBS News' Econowatch, you will be sickened by this colossal boondoggle that not only cost taxpayers tens of billions of dollars but actually enriched Geithner's Wall Street friends in the process - friends who had just themselves been bailed out by us: OK, so let's get this straight: the financial world is melting down, Uncle Sam had just saved the bankers' butts and now Tim Geithner the President...

NEW YORK (Reuters) – Goldman Sachs Group Inc (GS.N) could have suffered dramatic losses if the federal government had not intervened to prop up American International Group Inc (AIG.N), according to a government report. The report by the special inspector general for the government bailout program raises doubts about Goldman's previous claims that it was hedged against potential AIG losses. Last fall, as the financial services industry stood on the brink of collapse, the government stepped in with an unprecedented effort to rescue the system. AIG was among the companies that received billions of dollars from the U.S. Treasury's Troubled...

When the New York Fed renegotiated its original $85 billion deal to bail out AIG last year, it "effectively" transferred tens of billions dollars of cash from the federal government directly into the coffers of the AIG’s counterparties, according to an audit by TARP Inspector General Neil M. Barofsky.

The full SIGTARP report on AIG and its counterparty payments has been released. It contains all you need to know about the NYFED's bailout of Goldman Sachs. We are currently going through the report, and will post our findings as we have them. Key timeline events: AIG's collateral postings: Total taxpayer subsidies: (FOR SOME REASON THIS GRAPH WON'T SHOW UP SO AT SITE) Historical and current AIG CDS exposure: THIS ONE WON'T SHOW UP EITHER SO SEE AT SITE And the most critical conclusion presented by Neil Barofsky: The SIGTARP blasts the Fed's ongoing desire to keep everything hidden and...

The government’s watchdog over the bank bailout program is criticizing Treasury Secretary Timothy Geithner’s handling of one of the most sensitive moments of last year’s financial meltdown, questioning decisions he made while heading up the New York Federal Reserve Bank. The new report criticizes the New York Fed’s decision in the fall of 2008 to bail out insurance giant AIG by covering its clients’ losses, sending tens of billions in taxpayer dollars to overseas banks.

This video link has the complete story. The first 2:45 is all advertising. Skip ahead to 2:45 where this news story starts.

Has the AIG CEO Robert Benmosche, just three months into the job, had enough? The Wall Street Journal scoops the field this morning with news from inside the AIG board room that Benmosche has informed the board "he is considering stepping down as chief executive of the government-controlled insurer." Benmosche dropped the bomb last week, saying he was "done." According to the Journal's sources, Benmosche "is chafing under constraints imposed by AIG's government overseers, particularly a recent compensation review by the Obama administration's pay czar, Kenneth Feinberg." He's not quite out the door yet, though. He agreed to think over...

Goldman wasn’t the only contributor to the systemic risk that nearly toppled the global financial markets, but it was the key contributor to the systemic risk posed by AIG’s near bankruptcy. When it came to the credit derivatives, American International Group, Inc. (AIG) was required to mark-to-market, Goldman was the 800-pound gorilla. Calls for billions of dollars in collateral pushed AIG to the edge of disaster. The entire financial system was imperiled, and Goldman Sachs would have been exposed to billions in devastating losses. A Goldman spokesman told me its involvement in AIG’s trades was only as an “intermediary,” but...

Second straight quarterly gain for insurer. merican International Group, the insurance giant whose near-collapse last year prompted a massive federal bailout, on Friday posted its second consecutive quarterly profit as some of its units continued to stabilize and improved financial markets boosted the company's bottom line. The New York-based insurer reported a third-quarter profit of $455 million, or 68 cents a share, compared with a $24.47 billion loss, or $181.02 a share, during the same period last year, according to a regulatory filing. For the second straight quarter, AIG elected not to hold an investor call to discuss its results....

Following on previous posts by Janet Tavakoli and Dylan Ratigan, which both reference the need to uncover how and why it is that AIG counterparties received such generous taxpayer funded bailout terms, it is critical to present the letter penned by California Congressman Darrell Issa to New York Fed President Bill Dudley, demanding much more information on the Fed's decision regarding AIG. Issa's quote that "behind closed doors and with no approval from Congress, the FRBNY may have added an additional $13 billion of debt on the backs of taxpayers. These allegations, if true, amount to nothing less than a...

A much clearer picture is developing of what went on during the middle of the financial crisis, when AIG was bailed out by the government and Goldman Sachs ended up receiving 100 cents on the dollar from AIG on various instruments. The clearer picture is the result of Janet Tavakoli's provocative article, Goldman’s Lies of Omission. In the article, she claims that GS CFO David Viniar lied when he said GS's exposure to AIG would be insignificant. A anonymous Goldman apologist who writes at Economics of Contempt responded to Tavakoli's article, calling the article part of a, "ridiculous conspiracy about...

When the historians finally finish sorting through the appalling decisions that have been made in the past two years, this one will probably be at the top of the heap. Last fall, as AIG began to realize how screwed it was, it started negotiating with the counterparties to all the credit default swaps it had written. One of the AIG's goals was to persuade these counterparties- These sorts of negotiations are exactly what should happen when a company gets in trouble. It goes to its creditors and says, look, we can't pay you everything, so here's your choice: Take something,...

http://www.bloomberg.com/apps/news?pid=20601109&sid=a7T5HaOgYHpE

It is by now well known that the banks on the other side of credit default swaps sold by AIG got paid out at par when the government bailed out the insurance giant. But what isn't as well known is that by deciding to pay AIG's counter-party in full, the Federal Reserve was reversing months of work AIG executives had done to convince the banks to take a haircut on their positions Bloomberg reports that the documents were similar to those drafted by AIG, except for one crucial detail. Part of a sentence in the document was crossed out. It...

Ex-A.I.G. Chief Is Back, Luring Talent From Rescued Firm By MARY WILLIAMS WALSH Maurice R. Greenberg, who built the American International Group into an insurance behemoth with an impenetrable maze of on- and offshore companies, is at it again. Even as he has been lambasting the government for its handling of A.I.G. after its near collapse, Mr. Greenberg has been quietly building up a family of insurance companies that could compete with A.I.G. To fill the ranks of his venture, C.V. Starr & Company, he has been hiring some people he once employed. Now, Mr. Greenberg may have received some...

Pay Czar Feinberg, Not Obama, Behind Decision to Slash Executive Pay White House pay czar Kenneth Feinberg did not seek President Obama's approval to order steep pay cuts from bailed-out executives. Thursday, October 22, 2009 White House pay czar Kenneth Feinberg was the driving force behind the move to order steep pay cuts from bailed-out executives, and did not even seek the president's approval before making his decision. The Treasury Department is expected to formally announce in the next few days a plan to slash annual salaries by about 90 percent from last year for the 25 highest-paid executives at...

NEW YORK – Get over it, America. Wall Street bankers make too much money. The latest example: Goldman Sachs says it has set aside $16.7 billion so far this year for compensation — or about $530,000 per employee. Not bad for a company that a year ago received $10 billion in federal money as well as $12.9 billion from the government's bailout of American International Group Inc. Maddening? Sure. But forcing Goldman or any other Wall Street firm to pay employees less won't help a single unemployed American find a job. It won't help a single homeowner who can't afford...

Per: Peter Barnes of Fox News!

The latest Quinnipiac Poll is out and it’s more bad news for Sen. Chris Dodd. Despite a public relations blitz that had him returning to Connecticut for what seems like the first time in years, and a statewide email and choreographed “shout out” from President Obama in the Rose Garden, (Rob Simmons) is still leading Dodd 45%-39%.

WASHINGTON - Mitt Romney had already sent out invitations for his Phoenix fund-raiser, offering supporters the chance to meet him in a Chase Field luxury box over a $300-per-person lunch or a $3,000 VIP reception. But when former rival John McCain called with an offer to be listed as host for the event in his hometown, Romney happily went back to the printer for a new invitation with McCain’s name emblazoned on it. Yesterday, McCain’s gesture helped Romney’s political action committee raise about $80,000. It also consummated an 18-month rapprochement between two competitors who battled for the 2008 GOP presidential...

The federal government’s $180 billion effort to prop up American International Group has worked, averting an even bigger financial catastrophe. Now it’s time for the Obama administration to oversee the dismantling of the failed insurance giant with all due speed. A report this week from the Government Accountability Office makes clear that AIG would crumble and likely reignite financial fears around the world without the government’s massive support. And the report says it’s “unclear” whether AIG will ever pay back the $121 billion in government assistance still coursing through its balance sheet. The GAO report should provide the administration with...

The financial system and economy are coming back to life. So who's going to pay TARP back and who isn't? As the first anniversary of the government's $700 billion Troubled Asset Relief Program approaches, Treasury Secretary Timothy Geithner has a lot to be happy about. Thursday, facing the congressional panel charged with overseeing the TARP funds, Geithner reminded them that when he took office, the Treasury had given $240 billion to banks. Since then, $70 billion has come back as the healthiest banks have begun to repay taxpayers. He estimates banks will repay another $50 billion over the next 12...

Regulators today won't define 'systemic risk,' unlike 25 years ago. With Congress back in session and the anniversary of the Lehman Brothers failure upon us, the Obama Administration is resuming its quest for greatly expanded authority to bail out American businesses. Under the Treasury reform blueprint, any financial company, whether a regulated bank or not, could be rescued or seized by the Federal Deposit Insurance Corporation if regulators believe it poses a systemic risk. If recent history is any guide, when the feds stage their next intervention, they will not define "systemic risk" and they will refuse to release the...

Korean Consortium Buys AIG Building for Bargain Price SEPTEMBER 11, 2009 08:03 Korean capital has advanced into Wall Street for the first time by purchasing a high-rise commercial building in the U.S. financial center. A consortium led by Kumho Investment Bank last week paid in full 150 million U.S. dollars to buy the AIG headquarters building after being selected as the preferred bidder. The consortium beat out 30 other consortia from 17 countries in June. The Kumho-led consortium held a housewarming party by inviting dignitaries the day when it received ownership rights to the skyscraper. Attending the event were Elizabeth...

Insurer AIG's shares slide on analyst downgrade1 hour, 35 minutes ago (AP:NEW YORK) The near-term sale of American International Group Inc.'s assets will leave little value for common equity holders, a Credit Suisse analyst said Tuesday, downgrading the troubled insurance giant and slashing his price target for the stock in half. Shares slid $3.58, or 8.9 percent, to $36.47 in late trading. Analyst Thomas Gallagher downgraded his AIG rating to "underperform" from "neutral" and wrote in a research note that the government's plan to be a bridge rather than a permanent stakeholder suggests meaningful asset sales or initial pubic offers...

Equities broke their winning streak on Friday and now they may be looking to start a new streak. All three major indices are down between one half and three quarters of a percent. That's not that bad. One major index in China was off by 6% this morning on price to earnings "fears". Stocks retreated from Shanghai to Frankfurt on speculation the six-month rally has outpaced prospects for earnings growth.

Wearing flip-flops, khaki shorts and a green polo shirt, the new chief executive of bailed-out insurer American International Group Inc says he's getting a lot of work done from his massive villa overlooking the Adriatic. "People criticize me for being on vacation. I actually started work a week before I was actually supposed to," Robert Benmosche told Reuters in an interview. "I do have conference calls every day, I have all my information sent here. I can work here as well as in the office in New York." Benmosche, 65, previously the CEO of MetLife Inc, the largest U.S. life...

Up 27% just this month. The company took a beating but look now at over 47.00/share. Someone is making money.

The bankruptcy of Colonial Bank (CNB) was the largest bank-bankruptcy in the U.S. since several large, U.S. financial institutions collapsed last year – with the most recent being Washington Mutual, last fall. However, there is one huge difference between the mega-bankruptcies of last year and the collapse of Colonial Bank a week ago. During the large bank-failures of 2008, the acquiring institutions wrote-down the “assets” on the books of these banks by an average of 18% - according to a Bloomberg article. However, when BB&T Corp purchased Colonial, it immediately wrote-down Colonial's assets by 37%, double the amount of discounting...

Should the Fed Get Into the CDS Business? Exotic financial instruments known as credit default swaps played a central role in the crisis that brought the U.S. economy to its knees last year. Ricardo Caballero and Pablo Kurlat, two M.I.T. economists, have an audacious response: The Federal Reserve itself should get into the credit default swap business to prevent the next crisis. Their proposal will be debated today at the Fed’s annual Jackson Hole, Wyo., symposium by the world’s leading central bankers and economists. Harvard’s Kenneth Rogoff, former chief International Monetary Fund economist, will present a critique. A credit default...

In the late 1970s, as the federal government arranged to bail out Chrysler, not-yet-famous economist Alan Greenspan warned the problem “was not that it would fail, but that it would succeed.” And it did, thus paving the way for more bailouts, including (again) Chrysler. But the first Chrysler bailout was just one company, one time. The rolling series of financial bailouts over the past year -- Fannie Mae and Freddie Mac, AIG and Citibank, General Motors and Chrysler, etc. -- have not yet succeeded or failed. But they’ve raised a new moral hazard. These days, having invested so much in...

Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it has uncovered documents from the Treasury Department related to the government's bailout of insurance giant American International Group (AIG). The documents, obtained through the Freedom of Information Act, include internal Treasury Department emails and a series of outlines, presentation slides and articles outlining the details of the government's "investment" in AIG, which at the time totaled as much $152 billion. Following are highlights from the documents: A series of presentation slides detailing the terms of the AIG bailout. Included among the items is a...

<p>American International Group said Friday that it's spending $1.1 billion in bonuses to retain key staff members to help the troubled insurer wind down businesses and keep other parts of the company competitive.</p> <p>AIG said it has already incurred $824 million of expenses from a retention plan that was set up in 2008 and runs through 2011. Another $249 million will be spent during the second half of 2009, the insurer estimated in a regulatory filing.</p>

Public Discourse: The candidate who told his supporters "to argue with them and get in their face" now finds the shoe on the other foot. So they're taking names and encouraging you to turn in your neighbors.So this is hope and change — telling American citizens who in a democracy disagree with you that they are mind-numbed robots participating in mob action and expressing "manufactured" outrage. Considering that upward of 80% of those hooligans like their doctors, like their insurance and like their care, anger over your government-run health care was not that hard to assemble. It was not that...