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Friday: Now, let me get this straight…

Outland by Berkeley Breathed

Outland by Berkeley Breathed

Goldman-Sachs (G-S) and AIG go to the government last fall for money.  Hank Paulsen, our former Treasury secretary is a former CEO of G-S.  AIG hires a new CEO because the old one was under fire.  The new one, Edward Liddy, takes up the thankless task for token compensation- and $3M dollars for sitting on the board of…

wait for it

…Goldman-Sachs.

Yes, this is the same G-S that produced the faniciful earnings statement that ingeniously did away with the month of December 2008.  Yep, didn’t exist.  You know that painfully awkward holiday dinner you spent with the fam?  Never happened.

This is the same G-S who miraculously “raised” $10B dollars so that it can now give back the TARP money that it got from the government.  And the reason they want to give it back is because they don’t want no stinkin’ government telling them how much money they can give their stellar executives in bonuses.  It’s not the American Way.  It’s unnatural.

But this very same G-S, whose bank board member, Edward Liddy now sits as head of AIG, was funneled mucho dinero from the last bailout from AIG to cover its losses while other investors were forced to take losses.  No conflict of interest there:

He has said that he considers his work at A.I.G. to be a public service, performed on behalf of the taxpayers, who ended up with nearly 80 percent of the insurance company. His goal is to dismantle the company and sell its operating units, using the proceeds to pay back the rescue loans. On Thursday, A.I.G. said it had sold its car insurance unit, 21st Century Insurance, to the Zurich Financial Services Group for $1.9 billion.

Along the way, Mr. Liddy has clearly disclosed that A.I.G. was serving as a conduit, with much of the rescue money passing through and ending up in the hands of A.I.G.’s trading partners.

Goldman has said in the past that it had collateral and hedges to reduce the risk of its exposure to A.I.G.

Still, his stake could represent a potential conflict and is likely to reignite questions about Goldman’s involvement in A.I.G., and about why taxpayer money was used to shield A.I.G.’s trading partners from losses, when asset values plunged everywhere and most investors suffered greatly.

Had A.I.G. simply declared bankruptcy, the financial institutions doing business with it would have ended up in court, as they did in the case of Lehman Brothers, fighting to get pennies on the dollar for their claims.

Instead, Goldman Sachs received $13 billion of the Federal Reserve’s rescue money to close out various contracts it had outstanding with A.I.G. It was one of the biggest beneficiaries of the government rescue.

Yes, Edward Liddy is performing a public service no less valuable than the social worker who handles hundreds of foster care cases or the firefighter or the friendly and helpful IRS phone support that helps you finish your tax return on time.  Surely, SURELY, Mr. Liddy deserves some respect for the sacrifices he is making on our behalf.

Simon Johnson is very concerned about the possible conflict of interest and the criminality of this setup.  He has some very Watergate-esque questions for these dedicated public servants:

According to the NYT report, Mr Liddy has an apparent conflict of interest.  Please answer these question as simply and directly as possible, because otherwise they will be repeated indefinitely.  When did Mr Liddy disclose this and to whom at the Federal Reserve Bank of New York (or to which other responsible government officials)?  What did Hank Paulson, then Secretary of the Treasury and former CEO of Goldman Sachs, know and when did he know it?

Tut=tut, Mr. Johnson.  You are behaving like these men are criminals.  Is that any way to speak to people who are doing us a favor in these troubled times?  Antitrust indeed!  These are our betters.  You’re British.  You understand noblesse oblige and upstairs/downstairs stuff better than we do.  Why can’t you just accept the natural order and show us Americans how it’s done?

Meanwhile, Paul Krugman is being a fricking crepe-hanger again and stamping all over everyone’s greenshoots.  It’s spring, Paul, fergawdssakes.  Go outside and smell the periwinkle.

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43 Responses

  1. oh sweet … let’s just go smell the roses in the rose garden….keep going, nothing to see here. So GLAD Obama is there to watch out for the little guy and make all that damn change.

    my favorite sign from a local Tea party said “Obama has spent all his change”. The only problem is that he never had any to spend.

  2. I so miss Opus! I love Outland!

  3. I was just going to post the Krugman article. I LOVE THAT MAN! My favorite part:

    The most you can say is that there are scattered signs that things are getting worse more slowly — that the economy isn’t plunging quite as fast as it was. And I do mean scattered: the latest edition of the Beige Book, the Fed’s periodic survey of business conditions, reports that “five of the twelve Districts noted a moderation in the pace of decline.” Whoopee.

    LOL! They must hate him in the West Wing…

  4. OT, but since the criticisms of BO are fast and furious these days–at least from people who actually follow facts–Garafalo had to supply the knee-jerk reaction to all slights BO:

    Actress Jeneane Garofalo said the tea parties were all white and referred to minority conservatives who attended as those suffering from Stolkholm syndrome.

    At the end of the segment, Garofalo called FOX News’ viewership all white. FOX News normally receives three times as many viewers as MSNBC in the 8pm hour.

    http://www.realclearpolitics.com/video/2009/04/16/garofalo_tea_parties_about_white_power.html

    • There’s something to the (white) nature of the tea parties. Unfortunately, Garofalo ruins a perfect point she’s making by going to the extreme… Again.

      • they did all look like they belonged to exclusive country clubs didn’t they?

      • So she’s right when she says that the “Tea Parties” were racist? She just went too far?

        And I watched an awful lot of the Tea Party coverage and they didn’t all look like they came from some damn exclusive country club to me.

        I didn’t agree with all that was said at the Tea Parties by any means but I respect the right of those people to make their voices heard without an airhead, foul-mouthed, fool like Garofalo making them out to be racist.

        . And I do agree with much of what they said.

    • Actress Jeneane Garofalo said the tea parties were all white and referred to minority conservatives who attended as those suffering from Stolkholm syndrome.
      Jeneane is being a rac*st here, plain and simple. To suggest that someone non white can’t be conservative because of their color is stunningly stupid. And of course the big joke here is that Obama is conservative in my opinion.

      Of course the big issue here is that the orders from the WH is to distract, distract, distract. Make fun of the tea parties. Go off the deep end and talk about tea bags. Have Obama leave the country, again. Distract, distract, distract. It usually works. That’s not to say I agree with most of the messages from the tea parties about taxes being too high. But obviously a big part of the theme was the concern about the bailouts, and that’s a very reasonable thing to be concerned about.

    • I’d like to sic Afrocity on Garafalo. They’d go in a room, and only one would come out.

  5. Lastly, I won’t post Krauthammer, because I know that upsets some folks, but today he clearly spelled out where Obama’s voodoo deficit savings is supposed to come from. He said O has stated it “privately and publicly.” Entitlement savings…SS, Medicare & Medicaid.

  6. OT:

    HRC is hosting a digital town hall in the Dominican Republic. Link to live broadcast:

    http://news.yahoo.com/s/ynews/ynews_wl302

  7. That’s not all.

    The great 1st quarter GS had was not only the ability of making December go poof and disappear. Pretty much all the money came from… wait for it… AIG’s (government) bailout money.

    To make it short, the money came from you and me.

    Btw are they also thinking about giving THAT money back?

  8. Small points. Goldman did not go to Treasury for money, Geithner/Paulson called them in with everybody else and made them take it when AIG came to them on the same day they let Lehman collapse.
    http://www.wallstnation.com/TARP_10152008.html

    Plus, AIG didn’t hire Liddy, Paulson fired Willumstad, who had only been on the job about three months after, taking over from Martin Sullivan, and brought in his Goldman/Allstate/Chicago buddy, Liddy.

    http://news.muckety.com/2008/09/18/former-allstate-chairman-edward-liddy-tapped-again-by-treasury-secretary/5092

  9. Whenever something like this is allowed to happen somebody in congress is getting a payback, since it’s the Democrats running the show, I would imagine their campaign accounts are getting fatter by the minute.
    My guess that Obama is building his war chest for his run at the Vatican.

    • LOL, I like the idea of O running for Pope. Now I’ve done it. Just by suggesting he might not be right for the job of Pope of course makes me… wait for it…. a rac*st.

      • it would certainly get him out of our hair…

        • unfortunately its not racist the only requirement for assendance to the See of Rome is being a roman catholic.

          So it is not by race that he is excluded but because he is a protestant! sorry O unless you convert you will never be infalible!

          • The whole married with children thing could also be an obstacle to pontification -ness.

        • oh.oh..i.m all for that..

  10. This Goldman/AIG scandal is the scandal to end all scandals…. no other scandal will ever compare! (did I use the word scandal enough?)

    -AIG sells insurance on assets that Goldman (and many other firms) have, turns out those assets are not worth what they were supposed to be (they’re overvalued)

    -All the banks and Investment Firms start yelling ‘fire’ when the book value of those assets needs to be accounted for at greatly reduced values – which means the institutions basically have no money – they’re insolvent

    -AIG is getting calls to pay out the policies – which they can’t because they are so staggeringly large and so many policies.

    -Gov’ment gets called in to save AIG – so that they can pay out their policies, and in turn save the banks – some of whom actually need more, or did not get AIG protection policies, so the Administration makes ALL the institutions take some money from the government.

    -Gov’t fires AIG CEO, and replaces him with Goldman Board Member and give AIG 180+ Billion to pay out the Banks and other institutions

    -Gov’t changes mark-to-market rules so all the institutions can now claim .91 cents on the dollar (which is nowhere NEAR the value of these junk assets) and report quarterly earnings growth (with or without the magic of making a month disappear)

    Four months later – here we are – everyone has been complicit from the last Admin to the current one… all along taking HUGE campaign donations (Obama being the largest of all from Goldman – is that just a coincidence?)… everything is fine now… the economy has been saved…

    Except for that new pesky debt we will have to pay on for generations.

    Do I have this about right?… in layman’s terms…?

    This corrupted, cronied, ponzi scheme – because its nothing but – will eventually be revealed, and there will be pitchforks. They should have just let bankers jump out of windows like in the REAL Great Depression – rather than spending our hard earned money that we haven’t even earned yet, but will be paying interest on it until then and beyond.

    We don’t need a third party, or tea parties… we need pitchfork parties!

    • BTW – In the scenario above – when AIG pays out the policies for the ‘bad assets’… why is it that those assets remain with the institution? – shouldn’t those assets then become prpoerty of AIG??

      Perhaps Dakinat can answer this one – because this does look like the ‘double-dipping’ so many are talking about.

      • I thought the double-dipping refered to some companies getting bailout money and then also getting money from AIG’s bailout treasure.

        • OK – that makes sense too – they got their bailout money to help them with their Toxic Assets – then they got their AIG Insurance Claim Payout… but wait, they also STILL HAVE the assets on their books??

          I just want a layman’s term version of this scheme so I can explain it to everyone I know in terms everyone will understand. I own my own business, and see hundreds of clients each month, if they and I are lamenting how our business is – I want them to know why, and who to blame.

      • No, it’s like insurance, they pay you per your policy but you still keep your house if it gets damaged in say a fire or hurricane … make sense?

        • Yes, but in this case, the banks got direct taxpayer money to “fix” the house, PLUS got the insurance payout for the house damage, PLUS were then allowed to set the new appraisal on their own burned-out house.

          Geez, whose balance sheet would not look rosy after that?

  11. IRS workers see double standard on tax errors

    The Treasury secretary, who oversees the IRS, didn’t pay all his taxes. Neither did five other top nominees for the Obama administration, or their spouses. Now, as Wednesday’s tax deadline looms, some Americans are wondering why they should comply with the arcane requirements of the Internal Revenue Service when top administration officials failed to do the same. Even some IRS employees are upset at what they see as a double standard.
    ———

    “Our members are upset and angry,” said Colleen Kelley, president of the National Treasury Employees Union, referring to concern bubbling up within the IRS over unusually strict rules that can cost agents their jobs if they make a mistake.
    In an interview Tuesday, Kelley said the Geithner case underlines the need for a change of the rules governing IRS employees. “My issue is not that I want Geithner or anyone else punished,” Kelley said. “I want there to be a re-examination of the law that holds IRS employees to a separate standard: one in which a simple mistake can cost them their jobs with no right of appeal.”
    —–
    IRS employees have reported that taxpayers are occasionally citing the Geithner case when they are asked to pay their tax bills. “It’s making the compliance conversation harder,” Kelley said.
    —-
    IRS Commissioner Douglas Shulman told reporters Monday that there is no discrimination when it comes to tax enforcement. “The American people are pretty smart,” he said. “They understand that people who are nominated for high office are going to be put under a level of scrutiny. They also understand the tax code is incredibly complex.”

    http://www.chicagotribune.com/business/chi-wed-geithner-tax-0415-apr15,0,6037514.story

  12. I say 4th of July should be ‘Pitchfork Party’ Day…. we can take back our Independence – even if we cannot get our money back.

  13. One wonders about all kinds of conflicts of interest, no?

    One does.

    hugs RD & Co. Nice piece. Now what was that deal with revamping the IRS codes? Hmmm…. which dude is going to be handling that?
    these guys?

    geez.

  14. NEW POST UP

  15. …and yes, this is the same G-S that is paying each of it’s 28,000 employees an average of over $675,000 a year.

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