Officials handling the multibillion dollar bailout of insurance giant American International Group Inc. mismanaged an initial rescue attempt and may have overpaid other banks to wind down AIG's business relationships, a government watchdog says. Image Credit: Mark Lennihan
Paint The Obama Administration With Halliburton Brush Coated With AIG
The facts are surfacing about the activities of Timothy Geithner and his transition into the Obama Administration and the bail-out of AIG.
These facts should have the press take out the Halliburton brush and begin painting the Obama Administration with a healthy coat of AIG.
The reference here is to compare the point of view that the Mainstream Media held with respect to the relationship the Bush Administration had with the exclusive contract bid process they used to engage Halliburton Corporation in providing services on a sub-contract basis in the war effort in Iraq and Afghanistan.
With Halliburton, however, the argument can be made that this corporation was unique in being able to provide the services required and the Government did, in fact, receive the services contracted for. The American people got what they paid for.
What did the American people get from the management of its money spent on AIG and how was this effort managed.
For his part, Barack Obama assured us all how the Government would operate in a speech just after the $787 Billion dollar Stimulus Bill was passed by Congress.
With the party-line voting on the stimulus marking a defeat for his push for bipartisanship, Obama shifted focus to something else most un-Washington: making government spending transparent.
"Washington hasn't set a very good example in recent years, and with so much on the line, it's time to begin doing things differently," he said.
"I've tasked my Cabinet and staff to set up the kind of management, oversight, and disclosure that will help ensure that."
Enter (tax-cheat) Treasury Secretary Timothy F. Geithner ... it was revealed today in an article appearing in the Washington Post that he did not negotiate with the AIG corporate primaries, let alone the additional connected web of companies associated with AIG, a discount on the money to be paid to financial institutions to secure their sub-prime portfolio assets in order to save these institutions from collapsing. The taxpayer money committed paid 100% on the value of the assets purchased.
Treasury Secretary Timothy F. Geithner: The Federal Reserve Bank of New York didn't even try to get a good deal for taxpayers when it caved to demands from AIG's creditors that they should be paid in full. Image Credit: Clusterstock
This excerpted and edited from the Washington Post -
Fed criticized for not negotiating harder with AIG creditors
Inspector general says decisions during bailout 'came with a cost'
By Brady Dennis, Washington Post Staff Writer - Tuesday, November 17, 2009
Federal Reserve officials made only a passing attempt to negotiate discounts from the creditors of American International Group last fall before directing the company to fully pay what it owed on its troubled derivatives contracts, according to a report from the special inspector general overseeing the government's financial rescue program.
Treasury Secretary Timothy F. Geithner, who was then the president of the New York Fed, concurred with advisers that it would be impractical to impose losses on AIG's counterparties and that they essentially should be paid at 100 cents on the dollar, the report by special inspector general Neil Barofsky states.
The government extended an $85 billion loan to AIG in September 2008 as the company struggled to pay obligations related to derivatives contracts at its Financial Products unit. According to Barofsky, that initial loan came with a high interest rate, which "inadequately addressed AIG's long term liquidity concerns, thus requiring further government support."
Later, New York Fed officials agreed to buy tens of billions of dollars worth of complex securities that would allow Financial Products to cancel its most troublesome contracts, and staff members developed talking points that stressed to AIG's trading partners that they were benefiting from the bailouts and asked them to agree to concessions, according to Barofsky.
Ultimately, AIG's trading partners received more than $62 billion, which many critics have branded as "backdoor bailouts."
In a letter commenting on Barofsky's report, Fed officials called the original AIG loan "appropriate in light of the circumstances at the time." In addition, they argued that the Fed had done what it could in trying to negotiate with AIG's trading partners.
"We believe that the Federal Reserve acted appropriately in conducting these negotiations, and that our negotiating strategy, including the decision to treat all counterparties equally, was not flawed or unreasonably limited," the letter said. It said the Fed actively sought concessions from AIG's counterparties, "but was unable to obtain any such agreements." The officials added that they were wary of using their supervisory authority on behalf of AIG to impose losses on other companies.
The American taxpayer got what it paid for ... through the tens of billions of dollars to AIG and its network of companies. A 'still ugly' economy with a group of financial executives that will be giving some of the money they received with their intact multi-million dollar pay bonuses, political contributions to this one-party "CONTROL" Government regime we have three more years (hopefully, only one) to endure.
It is high time to start painting!