EDITOR’S NOTE: Billions of taxpayers’ dollars are being used to bail out those socially irresponsible financial institutions but, as President Obama has also openly accused, some high-ranking executives are putting those money into their own pockets and, as some congressman said, "The lack of transparency and accountability in this process has been rather stunning." On the other hand, Federal Reserve argues, “revealing names risked jeopardizing AIG’s continuing business. … the intention [of keeping them secret] was not to protect AIG or its counter parties, but to prevent the spread of AIG’s infection”. This is as if to allow a swindler-robber threaten his victims saying “If you do not give me more money and let me use it freely without your overlooking, let us all go to hell!” So, the whole nation, the whole world is actually being taken hostage by the handful of troublemakers! And the government is behaving hesitantly as if trying to catch the mouse in a porcelain shop (see Paul Krugman: "The Big Dither"
http://www.nytimes.com/2009/03/06/opinion/06krugman.html?partner=rssnyt&emc=rss ).
What shall we do then?
Democracy! Democracy marries freedom with regulation! Do not be hoodwinked by the lie that regulation violates freedom. What is Democracy? “Of the people, by the people, for the people”! People regulating and being regulated by themselves! People Power is the only power that can beat any socially irresponsible scoundrels! Democracy does not only live on Election Day. Democracy does not rest at the Capitol with a new Congress or at the White House with a new President till next Election Day. It lives, and should live, every day, every moment, everywhere! Why not, for instance, get organized and set up on all levels supervision committees to watch over the bailout money, our own money – committees made up of volunteer or/and elected grass-root taxpayers, volunteer or/and elected shop-floor employees of such financial institutions, legislative/judicial representatives and administrative officials? Why not?
Political democracy, as well as economic regulated freedom, needs to be brought into full play. Democracy needs to be expanded and perfected to play its full potential! This is the right time.
Time to act to save ourselves, our children and children’s children, fellow countrymen! Get to act!
THE TEXT
(Source: http://news.yahoo.com/s/nm/20090308/bs_nm/us_aig;_ylt=AgoygHFBsZ8L2ojb_YkHkhVZ.3QA )
NEW YORK (Reuters) – Where, oh where, did AIG’s bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published.
The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.
The newspaper reported that some of the banks paid by AIG since the insurer started getting taxpayer funds were: Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group.
Morgan Stanley and Goldman Sachs declined to comment when contacted by Reuters. Bank of America, Calyon, and Wells Fargo, which has absorbed Wachovia, could not be reached for comment.
The U.S. Federal Reserve has refused to publicize a list of AIG’s derivative counterparties and what they have been paid since the bailout, riling the U.S. Senate Banking Committee.
Federal Reserve Vice Chairman Donald Kohn testified before that committee on Thursday that revealing names risked jeopardizing AIG’s continuing business. Kohn said there were millions of counterparties around the globe, including pension funds and U.S. households.
He said the intention was not to protect AIG or its counterparties, but to prevent the spread of AIG’s infection.
The Wall Street Journal, citing a confidential document and people familiar with the matter, reported that Goldman Sachs and Deutsche Bank each got about $6 billion in payments between the middle of September and December last year.
Once the world’s largest insurer, AIG has been described by the United States as being too extensively intertwined with the global financial system to be allowed to fail.
The Federal Reserve first rode to AIG’s rescue in September with an $85 billion credit line after losses from toxic investments, many of which were mortgage related, and collateral demands from banks, left AIG staring down bankruptcy.
Late last year, the rescue packaged was increased to $150 billion. The bailout was overhauled again a week ago to offer the insurer an additional $30 billion in equity.
AIG was first bailed out shortly after investment bank Lehman Brothers was allowed to fail and brokerage Merrill Lynch sold itself to Bank of America Corp.
Bankruptcy for AIG would have led to complications and losses for financial institutions around the world doing business with the company and policy holders that AIG insured against losses.
Representative Paul Kanjorski told Reuters on Thursday that he had been informed that a large number of AIG’s counterparties were European.
"That’s why we could not allow AIG to fail as we allowed Lehman to fail, because that would have precipitated the failure of the European banking system," said Kanjorski, a Democrat from Pennsylvania who chairs the House Insurance Subcommittee.
TOXIC ASSETS/TOXIC WASTE
As part of its business, AIG insured counterparties on mortgage-backed securities and other assets. The collapse of the U.S. subprime mortgage market, which triggered a global financial crisis, left the insurer and some of its policy holders facing possible ruin as the value of assets declined.
U.S. regulators failed to recognize how much risk AIG was piling on in credit-default swaps, and by the time they understood, they had no choice but to pour in billions of public dollars, Kohn and other officials told the Senate panel.
Senators were outraged by the lack of details about where the bailout money has gone.
"That we find ourselves in this situation at all is ... quite frankly, sickening," said Senator Christopher Dodd, the Democrat who chairs the committee. "The lack of transparency and accountability in this process has been rather stunning."
Eric Dinallo, superintendent of New York State’s Insurance Department, railed on Friday against AIG’s failed business model, likening its insuring credit-default swaps as gambling with somebody else’s money.
"It’s like taking insurance on your neighbor’s house and even maybe contributing to blowing it up," he said at a panel sponsored by New York University’s Stern School of Business.
U.S. lawmakers have said they are running out of patience with regulators’ refusal to identify AIG’s counterparties.
On Thursday, Richard Shelby, the top Republican on the banking committee, said: "The Fed and Treasury can be secretive for a while but not forever."
(Writing Toni Reinhold; Additional reporting by Juan Lagorio in New York; Editing by Clive McKeef)
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