Originally Posted by kenny (Post 15598277)

The federal reserve refused to give congress the list of AIG counterparties.
http://www.nytimes.com/2009/03/06/bu...insure.html?hp

Originally Posted by kenny (Post 15598277)

The federal reserve refused to give congress the list of AIG counterparties.

http://www.nytimes.com/2009/03/06/bu...insure.html?hp


Now that information seems to have leaked. What do you guys think?



In response to my other thread entitled "AIG Counterparties"

http://www.gfy.com/showthread.php?t=...counterparties

Originally Posted by teomaxxx (Post 15595970)

Ditto for AIG (nyse: AIG - news - people ), which lost $62 billion in the fourth quarter and $99 billion in all of 2008 and is already 80% government-owned. With such staggering losses, it should be formally 100% government-owned. And now the Fed and Treasury commitments of public resources to the bailout of the shareholders and creditors of AIG have gone from $80 billion to $162 billion.

Given that common shareholders of AIG are already effectively wiped out (the stock has become a penny stock), the bailout of AIG is a bailout of the creditors of AIG that would now be insolvent without such a bailout. AIG sold over $500 billion of toxic credit default swap protection, and the counter-parties of this toxic insurance are major U.S. broker-dealers and banks.

News and banks analysts' reports suggested that Goldman Sachs (nyse: GS - news - people ) got about $25 billion of the government bailout of AIG and that Merrill Lynch was the second largest benefactor of the government largesse. These are educated guesses, as the government is hiding the counter-party benefactors of the AIG bailout. (Maybe Bloomberg should sue the Fed and Treasury again to have them disclose this information.)

But some things are known: Goldman's Lloyd Blankfein was the only CEO of a Wall Street firm who was present at the New York Fed meeting when the AIG bailout was discussed. So let us not kid each other: The $162 billion bailout of AIG is a nontransparent, opaque and shady bailout of the AIG counter-parties: Goldman Sachs, Merrill Lynch and other domestic and foreign financial institutions.

So for the Treasury to hide behind the "systemic risk" excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today.

And even with the $2 trillion of government support, most of these financial institutions are insolvent, as delinquency and charge-off rates are now rising at a rate--given the macro outlook--that means expected credit losses for U.S. financial firms will peak at $3.6 trillion. So, in simple words, the U.S. financial system is effectively insolvent.

Nouriel Roubini, a professor at the Stern Business School at New York University and chairman of Roubini Global Economics, is a weekly columnist for Forbes.com.

http://www.forbes.com/2009/03/04/glo...y.html?partner

Originally Posted by Biggy (Post 15576647)

I bet Goldman has some exposure, my personal thoughts are they may have a lot. A friend of mine worked as a trader at GS from 2005-2007 or so, right out of college - it was a dream job. He traded Credit-Default Swaps and they were acting as a market maker. He told me at the time it was the most profitable part of the bank, of all of GS in the boom times. It was a dream job because it was at the best bank, in the most profitable part of the best bank. The people there got P.A.I.D.

When all this shit hit, GS had surprisingly low exposure to all this BS (subprime, housing, etc), yet was raking in all the profit in the boom times and was considered the best bank. It doesn't add up and wouldn't surprise me at all if they were holding a ton of CDSes and receiving a portion of that bailout money. It also would go along with why they would want it hidden, because the last thing they would want is more risk/uncertainty around major financial institutions.

That article is good because theyre right, something doesnt add up. In my opinion, if TARP banks are involved, they should be named. For private parties, I agree, not right to disclose them, but fuck it, if theyre already getting gov't money on a different front, it should be duly noted they are also on the receiving end of this :2cents.

Originally Posted by Shaze (Post 15598422)

if you look at that list you'll realize that the American taxpayer and government is now throwing away money to non-US financial institutions.

Originally Posted by kenny (Post 15598492)

Those banks are either foreign or are US bailout banks. All are making profits off of CDS bets.

Tax payers are shipping money offshore and paying off insurance claims using AIG as a proxy.

This is the biggest robbery in World History and they are doing it in broad daylight.

Originally Posted by Shaze (Post 15598512)

LOL..exactly what i think. those list of banks are actually the smart ones. like they say there is always money being made by someone even in a recession. AIG is just like one big front to conceal who the robbers are. again, GO USA!!!! for hiding this from the people that our government is suppose to be serving and whose money they are actually using to make the payoffs.

Originally Posted by kenny (Post 15598567)

They created a bunch of contracts guaranteeing insurance on securities.

If by "they" you mean AIG then yes.

They never had means to pay this insurance. The CDS contracts are nothing more than a loophole designed to bypass insurance regulations set to prevent this behavior.

Yes, AIG never did have the capital to pay out the CDS insurance on the defaulted debt (I'm assuming most of this debt was from mortgage backed securities which went belly up when the housing market went bust and homeowners couldn't pay the higher ARM rates, or the price on their houses went below the purchase price, etc... and foreclosures increased)

Another huge problem is Naked CDS where the firm insuring the security doesn't even own the underlying security. Its just making bets with moral hazard written all over it. These guys could of deliberately fucked up the economy, lets face it the motive is there.

There not tricking us.
I'm assuming you mean the government when you say "their" in this one. Anyway, I never said anyone was tricking us. I just said the government is covering up whose hands the money is actually ending up in which is being funneled through AIG. By paying out the bailout money to AIG it looks like the taxpayer money is going into a US financial institution, where in actuality it is going to some non-US financial institutions.

All they have to do is void all the Credit Default Swaps.
who is "they"? If you mean AIG, the only way to not pay out the CDS insurance owed to banks is if they go bankrupt.

What will they lose?
By "they" if you mean AIG - they will go bankrupt. But if they are kept alive by the government through bailouts they are legally require to pay the CDS payouts which were bought by the banks/financial institutions

The premiums paid to AIG?
If they (the banks) don't get paid the promised amount by AIG from the CDS insurance they bought from AIG the banks were basically buying CDS insurance and paying premiums to AIG for no reason. If AIG doesn't pay out the amount promised in the CDS insurance the banks will lose all their investment in the debt that defaulted (mortgage backed securities when relating to our conversation).