AIG Goes to Washington

The Government Accounting Office is now investigating possible felonies related to the AIG CDO theft -
“Mr Barofsky also said he was to prepare an audit of the decision to repay in full counterparties of AIG, the insurance group bailed out with $173bn of government aid.
The Government Accountability Office on Tuesday recommended the Treasury should demand “concessions” from AIG’s counterparties and executives “including seeking to renegotiate existing contracts”.”
www.ft.com/cms/s/0/275f67ba-1e31-11de-830b-00144feabdc0.html?nclick_check=1

Congress has been looking into it since 3/26 –

http://www.washingtonsblog.com/2009/04/congressional-committee-on-financial.html

Nobel Prize Winner calls Geithner’s Plan “Robbery” -

http://www.businessinsider.com/henry-blodget-nobel-laureate-stiglitz-geithners-plan-is-robbery-2009-4

“How’s side are you on” CNBC?
Faber admits that he knew the banks were padding their earnings numbers by having AIG over-pay for their bond portfolios –

http://market-ticker.org/archives/920-Hoh-Hoh-CNBC-Admission!.html

When you get Government intervention, you get inefficiencies in the system Government’s desire to make housing affordable to low-income citizens led to lax lending standards and incredible corruption at Freddie, Fannie, Coutrywide and the like. The system created thrived on an environment of massive leverage.

Now we are seeing the consequences of the Bailouts and easy-money from the Fed –

GM Bondholders are refusing to make concessions to the Government, so the Government is threatening to put GM into bankruptcy. The banks are calling Obama’s bluff, because they already went out and bought CDS (insurance) on the GM bonds they hold and the banks who sold it to them did so, because they know they will get bailed out via AIG or the TARP/TALF/PPIP!

So the guys who hold the GM bonds will be made whole, the banks who wrote the CDS will be made whole and the taxpayer will pick up the tab!!

Why do you think Derivates held at banks INCREASED by $24 trillion last quarter? Because they are worth their weight in gold with Obama/Geithner/Summers/Bernanke holding the checkbook.

http://www.creditwritedowns.com/2009/04/us-banks-derivatives-exposure-explodes-to-200-trillion.html

Goldman’s exposure to derivatives is now over 10 to 1 –

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzfEaBHFSK7UTGeTux4d67nQFoUn4b2D8gJTtl_EGLGfzG0DBlOaGtKC5iVnHa9yLA4p2mq-qIdEse1Gh3wYR40jJzOujnswYI1HIfsWdc1wdrcDBM1d7VhjqELSutdXyAEAoPRHrXncFC/s1600-h/derivativesbanks.jpg

We continue to sink deeper into the abyss…