More on the (democrat Chris Dodd's) scandalous AIG billions of our taxpaying $$$ to foreign entities

[Milagros]

At least Campbell Brown of CNN (http://www.cnn.com/CNN/Programs/campbell.brown/) has mentioned it today.

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A.I.G. Reveals Biggest Beneficiaries of Its Rescue March 15, 2009, 5:16 pm E-mail This

Update | 8:49 p.m.

The American International Group on Sunday released the names of financial institutions that benefited last fall when the Federal Reserve saved it from collapse with an $85 billion rescue loan and then three subsequent bailouts.

The disclosure included counterparties to both its credit default swap operations and its securities lending businesses, both of which contributed heavily to A.I.G.’s troubles, as well as to muncipalities who participated in certain investment programs. All told, Sunday’s statement detailed payments of more than $94 billion, excluding payments to municipalities. All were made using government loans. (Read the disclosure by A.I.G. after the jump.)

Many critics of the company have demanded the names of A.I.G.’s counterparties as the insurer received government money totaling $170 billion. A.I.G. said in a statement that it made the disclosure in consultation with the Federal Reserve.

“Our decision to disclose these transactions was made following conversations with the counterparties and the recognition of the extraordinary nature of these transactions,” Edward M. Liddy, A.I.G.’s government-appointed chief executive, said in a statement.

Time and again, the rationale given for bailout out A.I.G. was that its credit default swap agreements — essentially insurance contracts on mortgage-backed securities — were so interwoven into the global financial web that to let the insurer fail would create chaos.

As the mortgages underlying the credit default swap agreements decayed, A.I.G. was required to post collateral to its counterparties. By September, the firm warned that it would run out of money, prompting the government to swoop in with its initial $85 billion loan. That money was used to post collateral to counterparties, including France’s Société Générale, Germany’s Deutsche Bank and...

All told, the posting of collateral for the swap agreements cost $22.4 billion, A.I.G. said. The money was paid to the counterparties between Sept. 16 and Dec. 31.

A subsequent government bailout provided money for the Federal Reserve to buy the securities underpinning these credit default swap agreements, canceling the contracts. Nearly $30 billion was spent to do so.

Foreign banks, including Deutsche Bank, Société Générale and Calyon and Britain’s Barclays, figured prominently among the firm’s credit default swap counterparties.

Deutsche Bank... and others also were owed money under securities lending agreements with the insurer. In this business, A.I.G. lent out shares in companies, primarily to hedge funds that sold short. While the business is normally considered safe, A.I.G. had reinvested proceeds from the business into mortgage-backed securities to earn a higher return. Those investments have since sunken in value.

Nearly $44 billion was paid out to 20 firms, most of which were banks. (One non-bank that appeared on the list was the Citadel Investment Group, the giant hedge fund based in Chicago. It received about $200 million.)

A.I.G. also disclosed $12.1 billion in payments to municipalities, including about $1 billion each to California and and Virginia, under guaranteed investment agreements. These were essentially places for municipalities to hold money raised from the likes of bond issuances until the cash was needed.

The insurer has already taken fire this weekend for its plans to pay out more than $165 million in bonuses to employees in the unit that brought A.I.G. down to its knees. Despite the consternation of the Obama administration and Republicans alike, the company was allowed to make the payments because of contractual obligations.

At a Senate Banking Committee hearing this month, legislators demanded to know who was on the opposite side of the table from A.I.G. on these contracts.

“We need to know who benefited, and we’re going to find out,” said Senator Richard C. Shelby, Republican of Alabama and the ranking member of the committee. “The Fed can be secretive for a while but not forever.”

–Michael J. de la Merced

Someone has commented on it, very much to the point:

Let’s see if I’ve got this right. • US taxpayers’ TARP funds paid for AIG to make a $5 billion counterparty payment to UBS, a Swiss bank, to pay for excessive risks that UBS took by speculating in subprime mortgage backed securities. So American taxpayers have put $5 billion into UBS that AIG would not have been able to pay on its own. By doing so, American taxpayers have put $5 billion into the Swiss economy that would not otherwise be there. • The same Swiss bank, UBS, recently admitted to aiding criminal tax fraud against the United States by intentionally helping US clients to set up anonymous overseas accounts in order to conceal unreported income from the IRS by smuggling it out of the country. UBS had to pay $780 million to settle the charges, and had to disclose account information about 250 to 300 clients after the IRS identified them and presented evidence that they were engaged in criminal tax fraud. • The same Swiss bank, UBS, is still refusing, however, to disclose account information concerning an additional 52,000 clients that the IRS has reason to suspect of tax evasion. American law grants the IRS clear legal authority to subpoena such records from any firm choosing to do business in the US. UBS, while doing billions of dollars worth of business in the US and with US citizens, is refusing to recognize the authority of the IRS under US law, claiming that Swiss laws override and invalidate the US laws that grant the IRS subpoena power. UBS claims that unlike American law, Swiss law draws a distinction between tax fraud and tax evasion, so it is legal under Swiss laws to intentionally withhold evidence of conduct by American citizens that is criminal under American law. The US Government has been forced to sue UBS to seek a court order requiring UBS to comply with IRS demands, clearly authorized by US law, for information about American tax evaders; and UBS has mounted an aggressive legal defense in that case.

The US cannot afford to allow banks that refuse to comply with US federal law regarding disclosure of information to the IRS in criminal tax evasion investigations to continue receiving TARP funds, or to continue doing business in the US. Congress has turned a blind eye to such things for far too long. With US taxpayers paying $5 billion to a foreign bank that spits in the face of the US government and US taxpayers when it comes to complying with US law governing criminal investigations, the time is long overdue for Congress to address this issue, and to do so forcefully.

If a foreign bank chooses to do billions of dollars worth of business within the US, it has to accept compliance with US criminal law as part of the price of doing so. If compliance with Swiss banking secrecy laws is more important to UBS than complying with US law governing criminal investigations, then UBS should refrain from doing any business in the US, or with US citizens. More to the point, Congress should no longer allow UBS or other banks taking the same position 0on banking secrecy laws to do business in the US. US banks should also face financial penalties for continuing to do business, even abroad, with UBS and all other foreign banks that take the same position on banking secrecy laws.

There is clearly an urgent, pressing and immediate need for Congress to amend US federal law to prohibit the payment of any further bailout funds to any bank or other financial corporation that refuses to comply with IRS demands for production of records relating to tax evasion investigations.

Congress should also consider legislation prohibiting any bank that refuses to comply with IRS information requests relating to tax evasion investigations from doing business within the United States or with US citizens; providing for the orderly closure and winding-up of the affairs of any US branches or subsidiaries of such banks; and imposing a 75 percent tax on the gross proceeds, rather than profits, of any transactions between American banks and such banks.

For far too long, the US has allowed UBS to facilitate the commission of criminal tax evasion by US citizens, ignore law enforcement efforts by the IRS and other agencies, and claim foreign law as a basis for immunity from American law. The US must stop tolerating such contemptuous conduct, starting immediately. It is long past time for Congress to put an end to this, and the need to do so is urgent.

— Posted by 02Pete

http://dealbook.blogs.nytimes.com/2009/03/15/aig-discloses-counterparties-who-received-224-billion/

It was also reported over the weekend that billions of taxpayer dollars meant to bail out AIG have gone to foreign banks. AIG paid $11.9 billion to Societe Generale in France, $11.8 billion to Deutsche Bank of Germany, and $8.5 billion to Barclays in England.

The money paid to banks covered losses on mortgage investments and other transactions.

[Milagros]

It was clear from CNN's investigation (aired yesterday by Ali Welshi) that Chris Todd lied, and rather knew about it (AIG scandal) all along, the one was in the committe to give them the money to begin with, that should be the center of the outrage (as well).

[counterpunch]

Chris Todd?



         

[Milagros]

http://krugman.blogs.nytimes.com/2008/04/12/who-is-john-galt/ Who is John Galt? - Paul Krugman Blog - NYTimes.com

btw, [lefty] Krugman is NOT one of my favorite writers, but I am glad he came out against Obama’s plan.

[Milagros]

http://www.foxnews.com/politics/2009/03/21/senate-hopeful-blasts-dodd-aig-bonus-fiasco/ Senate Hopeful Blasts Dodd for AIG Bonus Fiasco - Mar 21, 2009

[TribalPrincess2U]

Addresses, names, family names, addresses.

Hunt em’ down. They don’t deserve any privacy.