The SIGTARP Report doesn’t pull any punches.
“Questions have been raised as to whether the Federal Reserve intentionally structured the AIG counterparty payments to benefit AIG’s counterparties — in other words that the AIG assistance was in effect a “backdoor bailout” of AIG’s counterparties,” said the report. “Then-FRBNY President Geithner and FRBNY’s general counsel deny that this was a relevant consideration for the AIG transactions.
“Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions — indeed, the very design of the federal assistance to AIG — was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties.”
If AIG had been in liquidation the "cronies" would have been lucky to get 40 Cents, if that.
And if that had been a liquidator any other creditors of AIG and the shareholders (remember that word “minority shareholders”), could have reasonably asked, “what about us?”
What it doesn’t clearly explain is what they were thinking.
Perhaps there was a conflict of interest, let me guess, perhaps they were thinking that if the $68 trillion of derivatives that related to the crisis started to blow like a nuclear chain-reaction it might ignite the world-wide $500 trillion or so derivatives “weapon of financial mass destruction”.
That was obvious before the $700 billion TARP program would be approved by Congress, it was all about derivatives then, it still is.
A good account of those “negotiations” can be found here:
So was it a scam, inexperience, bad negotiating skills, or simple stupidity? Or perhaps there was there a conspiracy?
Perhaps the “good friends” at GS explained to Chancellor Geithner that they had a nuclear bomb in their bag and if he didn’t play ball they would detonate it?
And in which case Wonder-boy’s chances of cleaning up on the revolving door would be out of the window?
So much for the policy of not negotiating with terrorists; in the final countdown, what matters is how big a bomb you got!
Looks like GS et al had the biggest bomb, much bigger than the whole nuclear arsenal of USA, and now they are sitting pretty, so Chancellor Geithner.
Better get used to it