Geithner’s Fed Told AIG to Limit Swaps Disclosure

[ElKabong]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aXIvW4igKV38

Jan. 7 (Bloomberg) -- The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show. --------


The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year.

[ArlJim78]

why do you think everyone was saying that the guy is "uniquely qualified" to be treasury secretary? because he's one of the main criminal players that conspired to make sure that Goldman Sach was made whole. in times past this would have been a big scandal, but now the whole place is a criminal cesspool and all the watchdogs have been bought off or turned into lapdogs, so I doubt the story will get much play.

[Robert Goren]

It is actually being covered all over the place including MSNBC. I have one Question for you who opposed the bail out of the banks. How many banks would be standing today if there was no bail out. Even a sound bank goes under if there is a run on it. If the 3 or 4 biggest banks in your town go under, are you going leave your money in the 5th biggest bank? I know I am not. Everything I have is going into cash and is going in a cottage cheese container in the fridge. I think almost every bank in the country would have had a run on them. There is no bank that stand demands of 20% of their deposits. JMO

[Black Ruby]

Bailouts weren't the only option. They could have treated the big shysters' banks the same way they do regular banks when they founder... seize em, shed the bad stuff, sell what has value.

[bisket]

the real question is why did the government allow the swaps to enter the home market in 2002? these type of swaps first began in 1984 during reagan years of opening the markets. the swaps were only allowed in the COMMERCIAL real estate market in 1984 until 2002. the swaps were invented by lehman bros. the fed allowed it in the investment market because it was understood that if you invested in them there was a level of risk. with the swap system, commecial real estate and developers used this system of lending to begin the boom of building malls and planned developments. if there was a run on the investment banking sector it would hurt the economy, but not paralyze it. by letting the swaps into the home lending market it allowed a run to affect ALL CONSUMERS!!!!!!!!!!!!. the real problem is we allowed investment banks to start acting like regular banks. to be quite honest the fed and geitner didn't have a choice. the bottom line is the country as a whole is invested entirely to much in the stock market. we slowly as a country put all our eggs in one basket. the swaps affected the investment sector, the home owners and the consumer sector, and THE STOCK MARKET AS WELL. to be honest all of our economic officials have acted correctly to the problem from the bush administration to the current group. if voters want to hang anybody a good candidate is our former fed chairman greenspan. it seems everyone is angry with our current economic officials. this only says to me THEY ARE DOING THEIR JOB FOR THE FIRST TIME IN 24 YEARS!!!!

[Tom]

They could have selectively bailed out banks using some semblance of common sense, which they did not. They just literally threw money at them with no controls in place, no strategy, no plan, just threw money at them.
The only plans that were actually carried out were Dodd's protection of the bonuses in return for his ill gotten gains and his wife's appointment to a BOD.
Any high school kids could have drawn up a wiser, more comprehensive, workable bail out than the morons in DC did.

[bisket]

tom i totally agree with you. although i think this may have been the scenario: lets say you and a few others are standing underneath a burning building with blanket to catch people that are jumping, and theres 10 people that are ready to jump off. they start jumping one after another. what's your process of deciding who your gonna save? :faint:

[bisket]

well this is why dodd is retiring. i will say the worst thing that could happen is for congress to be charged with the oversight of our financial insitutions. i think the structure that was set up early in the 20th century is still workable. the fed did its job for many years when pretty much if you took a pole of whether people liked him or not he would probably get a 10% approval rating. our problems are from the fed that was pretty much the pep squad for the past 20 years. that and the fact that clinton turned into a political postion. the idea of the fed was that it was a-political.

[Robert Goren]

Bailouts weren't the only option. They could have treated the big shysters' banks the same way they do regular banks when they founder... seize em, shed the bad stuff, sell what has value.That is a nice theory. With small bank there is usually a bigger bank to take over what has value. With these big banks there was no other big bank in good enough shape to take over. At least all of top 25 or so banks took bail out money. Who was going take over their valuable assets? There was no one to do it. If there been only one or two their assets could been divide up. There was just too many banks and too many assets. I do agree that there should been more strings attached, a lot more strings.

[newtothegame]

That is a nice theory. With small bank there is usually a bigger bank to take over what has value. With these big banks there was no other big bank in good enough shape to take over. At least all of top 25 or so banks took bail out money. Who was going take over their valuable assets? There was no one to do it. If there been only one or two their assets could been divide up. There was just too many banks and too many assets. I do agree that there should been more strings attached, a lot more strings.

So whats your thoughts on how it went down? What was a solution? I for one don't think Geithner should of been promoted!
As for the banks and bailouts, I know it seems tough, but there has to be some accountability for bad business practices. I still think there is much "unknown" about what was said...who is covering who..etc etc.
The only accountability which seemed to happen was bankers got even richer.
When businesses are run poorly, they fail. Bottom line. They fail. When a business goes under there are new emrging businesses which step in to fill the voids created. Its called entreprenurial spirit. Now could there have been a business to step in in this case? I concede it would of been a huge crisis. For that matter, do you all really think the banks which were all so close to failing that we had to act here and now, are now healthy and vibrant in less then a year? Lets be real here. No business can so rapidly turn it around that quick. So the question remains for me....was there really a huge crisis which cost the tax payers billions, or was this just another case of a "legalization of misappropriation of government funds"? Someone and some people made a whole lot of money at the tax payers expense!!!!

[Robert Goren]

I don't think Giethner should have been promoted. I also do not think that most of the banks are all that healthy and vibrant. Their CEOs are on CNBC all the time saying how great they are doing. I don't believe them. Only Goldman has paid back all of the Tarp money, A few more have made a token payment, but most haven't paid back a red cent. In 1980 I lived near a small town whose bank failed. Everybody who had money in got it back. Almost everyone who had a loan from it had it called. Very few were able to get a new loan from an out of town bank. It was sad to the town almost become a ghost town overnight because some bank employee embezzled money. When a bank goes under a lot of other businesses go with it.

[bigmack]

I don't think Giethner should have been promoted.
Slide into those big kicks and make a stance on whether Giethner should stay, given this 'hide the books' email discovery.

[newtothegame]

I don't think Giethner should have been promoted. I also do not think that most of the banks are all that healthy and vibrant. Their CEOs are on CNBC all the time saying how great they are doing. I don't believe them. Only Goldman has paid back all of the Tarp money, A few more have made a token payment, but most haven't paid back a red cent. In 1980 I lived near a small town whose bank failed. Everybody who had money in got it back. Almost everyone who had a loan from it had it called. Very few were able to get a new loan from an out of town bank. It was sad to the town almost become a ghost town overnight because some bank employee embezzled money. When a bank goes under a lot of other businesses go with it.

I agree that when any business goes under, bank or otherwise, its not a good thing. But, it is a part of "the american way". In our capitalistic society, businesses are challenged to stay competitive. Its a "rat race" to use a cliche'. The problem I have with all of this is "disclosure". You say that you feel the banks aren't that well as of now. I would tell you that I am not so sure they were ever really that "ill" to start. Too many back room deals. Too many people stood to make ALOT of money. Every day you hear about the money and wall street getting richer and richer. How is this possible if the banks are so ill that they can't survive? Has anyone seen the most recent earnings statments from Goldman? Doesnt look like an ill bank to me. Either that or someone is lying!!!
Thats my point. I am not a conspiracy theorist who is afraid to walk outside as the martians may swoop in and take me away. But, I must tell you that more and more I see that there is very little reason to trust ANYONE in government. They are in it for THEMSELVES. They could care less about you or me. Their actions speak it daily!
So again I ask....were the banks so ill that they couldn't survive? And if so, how is it a year later their numbers look so rosey (definitely not on life support) YET VERY FEW HAVE PAID BACK ANY OF THE TAX PAYER MONEY????? They can't even tell ya where the money went.. What a freaking joke!!!!

[Robert Goren]

You believe earning statements? Those things are worded to get maxout stock prices. Even the traders are not believing them. NO bank stock worth anything close to what was worth 2 1/2 years ago.

[Robert Goren]

Slide into those big kicks and make a stance on whether Giethner should stay, given this 'hide the books' email discovery. He should go. Who do you want in there? Bring back one Bush's losers? Bankers are Crooks. A college prof who is not smart to be a banker?

[newtothegame]

You believe earning statements? Those things are worded to get maxout stock prices. Even the traders are not believing them. NO bank stock worth anything close to what was worth 2 1/2 years ago.

You can word them however you like...but numbers are numbers! the numbers by law, have to be correct. If found to be incorrect, it causes nasty little investigations by the SEC, etc etc, But, thats my point. Who is the SEC? Your looking at it saying that they can make a dead plant look like a rose, and what I am saying is you could possibly be right. It fits a liberal agenda to have the sky falling. What I am saying is they have made a rose look like a dead plant. How else could they pass those billion and billion of dollars if the banks "looked" healthy?
Why now are there wide spread reports that those same "ill" banks who needed the money to keep from failing, are having a hard time even accounting for the money? I would think if a business was on life support, recieved that life support in the form of tax payer dollars, they would be able to say where the money went. After all, how did they NOW get off of life support?
As far as stock prices and where they were two years ago....
You have to understand a few things too justify prices. Most of the market is based on speculation anyways. Secondly, PE ratios play a large role is the health speculation of a company. You cant say that because bank stocks arent where they were two years ago that this proves its UNhealth. You could make that same arguement for about 80% of all the listed stocks (banks or otherwise) if that were the case.

[bisket]

heres the scoop guys. if you invested in a money market, pension account, anuity etc. that had money invested with these swaps you wouldn't be gettin your money back if not for tarp. the fact of the matter is the people who would lose are ME AND YOU!!! thats basically the point. i don't know what the formula is but the INVESTMANT banks that made these loans only had to insure them for a pittance of the amount of the loan. home mortgage equities are considered safe investments because home mortgages are fdic insured. so for decades this was considered a safe place to invest money. many of the checks retiries get in the mail every month comes from these equities. well pension funds, anuities etc. still considered the swaps WHICH AREN'T FDIC INSURED the same as the OTHER mortgage based equities that are fdic insured, and invested heavily in them. so basically you could probably quadruple the amount of people that would be out on the streets if the fed didn't do what it did. these people wouldn't be "undeserving" because they worked their whole lives to save that money to retire on. so another words fellas BUCK UP AND TAKE ONE FOR THE TEAM!!!!!!

[ElKabong]

Read where Peter Pan is going to be called on the carpet to explain this...S/b loads of fun.