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Possibly epic story about the Fed unfolding

|Includes: American International Group Inc (AIG), GS

Tyler Durden, the anonymous and sometimes controversial blogger at Zero Hedge, has posted a possibly epic story about the Federal Reserve. If his story is accurate, then according to him, Goldman Sachs actually approached AIG in August 2008 to negotiate an exit to the now infamous credit default swap derivative contracts. Instead, the Fed actually told AIG to stop their negotiations, as a bailout would be imminent. This could be huge, as it would mean that perhaps billions of taxpayer dollars were left on the table.

First, let me say that I don’t believe in any conspiracy theories, either about the Fed or anything in general for that matter. I believe that conspiracy theories are excuses that people who have no power come up with to blame their misery on something else, like “the man”, “the system”, and so forth–instead of their own lack of determination.

This is not about conspiracy theories. I am not on the “End the Fed” bandwagon (what would you replace it with?). I want to make that clear before I go further.

This story does show, however, possibly tremendous negligence on the part of the government during the bailout. What this means is that AIG’s counterparties were actually willing and able to take a loss instead of needing AIG to get bailed out with taxpayer money.

So without further ado, read the whole thing: http://www.zerohedge.com/article/federal-reserve-moral-hazard-smoking-gun-august-2008-goldman-was-willing-tear-aig-derivative

If this story turns out to have legs, this Tyler Durden guy should be a Pulitzer candidate.

-Alex Cook



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