Jim O'Sullivan

Was the AIG Bailout a Goldman Bailout by Proxy?

There is no need for the title of this article to be in the form of a question, unless we're playing Jeopardy! here. I mean, c'mon. Why do you suppose that the recipients of your money and the amounts (including the $13B of your dough that Goldman grabbed) were announced at the same time that they revealed that the guys at AIGFP were getting bonuses? Plenty of outrage about a hundred and sixty five million. None about scores and scores of billions to GS and a bunch of foreign banks. And yet there's STILL some doubt in your mind! GS pulled off this scam perfectly. In a better world they'd be spending the money on fees to their criminal lawyers.

10 Stupid Moves That Created This Mess

Hoover said:
"But those that believe in totally unregulated markets, like to blame it all on their favorite red herring -- low income people."

I'm old enough to remember a time when most people knew that ad homimim attacks were a poor excuses for a reasoned argument. But, since that's the new standard, I might as well get down with everyone else: work on your reading comprehension, Hoover. Neither Cautiousinvestor nor I were "blaming" low income people.We were blaming the politicians for their misguided idea about how to treat low income people. And since you know the exact percentage of the problem that consists of "social justice" (whatever that is) loans, why didn't you share it with us? And how do you know that either of us believes in "totally unregulated markets? Do you think that because we can see where that particular kind of regulation led us that we therefore believe in no regulation at all? I'm surprised that someone as smart as you could make such a fundamental logical error.

10 Stupid Moves That Created This Mess

The most important factor you leftout is the Federal government. Congress (no matter which party controlled it at any particular time) and the White House (ditto) pressured the finance industry to lend to people with no down payment money in order to advance the worthy cause of increasing home ownership, especially minority home ownership. That injected the toxins into the financial system that became the raw material for the CDO's that the CDS's insured. Once again, the road to hell was paved with good intentions.

AIG Bailout Redux: The Perils of Open-Ended Liability

AIG was, and I hope will remain, a great insurer, with enormous reserves, and army of underwriters and claims professionals who are second to none in their ability to operate in the difficult and risky world of assuming the risks of people and business with efficiency, integrity and professionalism. AIG has been taken down, not by its army of outstanding workers, but by a small group of thieves in two little offices in Connecticut and London who had nothing to do with AIG's core operations. AIG's leadership was wrong to trust them, but we can say that only with the wisdom of hindsight.
Disclaimer: I am an AIG employee, so I hereby confess my bias. But I know what I'm talking about. And I'm tired of seeing our decades of hard work trashed by people who don't.