Newly released AIG emails further impugn Tim Geithner

What would you think about the Federal Reserve Bank of New York telling AIG to intentionally withheld from public scrutiny that AIG was paying 100 cents on the dollar for credit default swaps at the same time that AIG was crying for a bailout from the public, thereby hiding from the public that the public was functionally bailing out Goldman Sachs and other large banks? What would you think about the fact that Tim Geithner headed the New York Federal Reserve when this was going on? Eliot Spitzer, William K. Black and Frank Partnoy sum up the issue:

Today, a Bloomberg story revealed that under Timothy Geithner's leadership, the Federal Reserve Bank of New York told AIG to withhold details from the public about its payments to banks during the crisis. This information was discovered when emails between the company and the Fed were requested by representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.
Who owns AIG? The taxpayers own 80% of it. Therefore, AIG should release the emails. Who can and should make this decision?
The taxpayer's stake in AIG is held by the A.I.G. Credit Facility Trust, whose three trustees are Jill M. Considine, a former chairman of the Depository Trust Company and a former director of the Federal Reserve Bank of New York; Chester B. Feldberg, a former New York Fed official who was chairman of Barclays Americas from 2000 to 2008; and Douglas L. Foshee, chief executive of the El Paso Corporation and chairman of the Houston branch of the Federal Reserve Bank of Dallas. We call on these three officials (interestingly all former Fed officials) to immediately release the documents we request. The value of these documents, if it were ever in doubt, was certainly proved by today's revelations. Release the emails.
See also, this earlier post on a NYT op-ed by Spitzer, Black and Partnoy.

Continue ReadingNewly released AIG emails further impugn Tim Geithner

Will the federal government continue coddling AIG?

Fascinating Op-Ed in today's NYT, written by three former prosecutors (ELIOT SPITZER, FRANK PARTNOY and WILLIAM BLACK) who are demanding that AIG be forced to release voluminous emails in its possession that would allow the public to understand the economic meltdown that cost taxpayers hundreds of billions of dollars, including 180 billion dollars to AIG. I agree entirely. There is no reason for delay. It's time to turn AIG inside out, that much is clear. The only thing that is unclear is whether the politicians in Washington DC can muster up the courage to represent the taxpayers rather than the big banks. Here's an excerpt from the Op-Ed piece:

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Continue ReadingWill the federal government continue coddling AIG?

On the continuing loss of the middle class

Eliot Spitzer discussed the economy of the United States with Amy Goodman of DemocracyNow. Has the economy recovered? No:

[W]e have a major crisis in this nation, and that crisis is jobs. That crisis is that we are seeing the elimination of the middle-class job foundation that permits most Americans to do better year after year after year. The reality is median family income has been stagnant for forty years, and the policies of what I call financialization, which is major banks trading assets back and forth, the Wall Street banks, such as Goldman, which is rightly a lightning rod right now for much of what’s going on, buying and selling, playing with tax dollars in proprietary trading—they make huge money, nothing is added to the economy, jobs are sent overseas. All of this going on simultaneously. That is what our economy has become. And Ben Bernanke and Tim Geithner were the architects of this.
Spitzer also commented on AIG and credit default swaps:
AIG was, to a great extent—their financial products division—a Ponzi scheme supposedly guaranteeing hundreds of billions of dollars of CDS collateral, credit default swaps, with no collateral behind it. That is part of what brought us down. But that is the system that the Fed was overseeing. They specifically rejected the effort back in ’94, ’95 to regulate this swamp. The derivatives, that are a quintessential Wall Street creation, have some small utility at an economic level, but became an enormous revenue stream for banks, and they were unregulated. People made a fortune. We taxpayers hold the bag.

Continue ReadingOn the continuing loss of the middle class