AIG is the bag man paying off the GS and other bank gambling debts with shakedown money from US taxpayers. Explained by Zero Hedge (link added, some bold emphasis present and some added):
For those to whom this is merely a lot of mumbo-jumbo, let me explain in layman’s terms:
AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.
In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).
What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner’s (and thus the administration’s) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.
Thank you Zero Hedge.
Why I’m posting this stuff when this is a neuroscience blog: because, in 2009, if you’re running a scam, and the regulators are too wrapped up/overwhelmed/depressed/scared to do anything, let the blogosphere handle it.
Normally, with separation of powers and all, when the executive branch fails, and the legislative branch fails, you go to the third branch: the judiciary.
But the court isn’t working. Why? Because it’s the Delaware Chancery court, full of those play-dough amorphous corporate “business judgment” mumbo jumbo decisions. We need to temporarily Federalize Delaware and send all the corporate governance cases up to the SDNY, let Judge Kimba Wood handle these like she handled the Milken case. Forget it, she even married into the mob.
Now when even the third branch isn’t working you go to populist opinion and get the electorate riled up so they throw the bums out. And that is why I’m posting all this stuff. Either the political sphere needs to clean it up or else let the populist opinion fall where it may.
Some previous Neurological Correlates posts about this matter, starting last October:
Goldman Sachs- Cheney – Paulson: A conspiracy theory.
New York Times Sez Neurological Correlates Sustains Crazy Goldman Sachs Conspiracy Theory.
(Editorial note: Who’s crazy now, NYT?)
Removing the net capital requirements led to off-track betting at AIG
Delusional world led to culture of bonuses-as-entitlements
Goldman Sachs Conspiracy Club: Add Rolling Stone Mag
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