Philip Gvinter

AIG Dumps Two Toxic Assets on the Fed

Truth be told the treasury could assume the functions of the Fed. Or the Fed could be allowed to continue to serve these functions if proper oversight was legally mandated.

I have no problem with the concept of fiat currency, a central bank and the need to control interest rates and the money supply. I do have a problem with this task, which seems best left to a fully transparent government agency being done by a privately owned corporation which lacks full transparency and any level of meaningful oversight.

I understand the benefits of keeping the Fed independent and free of political influence but still feel that the lack of transparency and oversight are highly disturbing.

AIG Dumps Two Toxic Assets on the Fed

But the banks super double secret promised that their jumbo prime portfolio with a 7% default rate and tons of stated income and stated income/stated asset loans which are now underwater are worth $.90 on the $1 how can you not believe them?!?!

I am becoming more and more disturbed by the lack of oversight and accountability at the Fed. The video of representative Darryl Issa questioning the inspector general of the Federal Reserve about $2T of loans and getting no answer is truly shocking. The Fed is an incredibly important institution but it should not be allowed to operate in a black box devoid of all transparency and public scrutiny.

CDS and the Looting of AIG

Couldn't agree with you more. CDS writers need to have regulations in place dictating reserve requirements and be treated like the excess line insurers that they are. Speculative CDS needs to either be made illegal or at the very least be moved onto an exchange and treated like equity option contracts.

While I understand that the government's propping up of AIG is meant to keep CDS counterparties solvent I am deeply disturbed by the lack of transparency in the process. Is the government allowing AIG to pay out all CDS claims or only those which can prove actual losses/ownership of underlying bonds? I am not happy about but can accept the need to have the government pay (via AIG) claims on CDS which are tied to actual securities but cannot see the legitimacy of paying naked CDS claims.

BofA, Lehman, AIG: The New Financial Realities

WM and WB with their massive Option ARM holdings should be the next two in line.