[quote=Allan from Fallbrook][quote=SK in CV]
Speaking of the AIG counterparty payment, what’s your take on that? Nearly all of my information on that comes from former brokers, so I might be somewhat biased, but I don’t see any major problems with Goldman having received that payment (in that it was collateral they already held, so they were getting the money one way or the other).
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The problem that I had with it is that it was basically a gift to GS. AIG owed GS (and others) tons of money because of their derivative liabilities. I remember providing some defense for the bailout, as to the need for injecting liquidity into the market. All the connections between the fed and the SEC and Treasury (those designing the bailout) and GS were pretty well known and bothersome. (If you haven’t read Matt Taibbi’s piece in Rolling Stone about GS, you should.) But it didn’t appear that Goldman Sachs would have their hands out. What I didn’t know, but I suspect all those creating TARP did know, is that GS would be by far the biggest beneficiary by way of those derivatives.
I don’t think that GS would have got all the money otherwise. AIG would have gone bankrupt. They would have been in line like other creditors. (the collateral, if indeed those derivatives are secured, which I’m not sure they are, would have been severely impaired.) It would have been full employment for BK attorneys for a decade. I have an attorney friend that does that kind of work for one of the giant law firms, and you better believe when there was talk of AIG going down, his erection lasted much longer than 4 hours.
So while they may have been legally entitled to the payments (the current charges against them notwithstanding), I’m not sure the payments they collected were really the intent of the bailouts. At least not superficially. I have little doubt those designing the bailout plans knew exactly where the money would go. Not exactly where I wanted my tax dollars going under the circumstances.
