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AIG Counter-Party List Is Heavy On Foreign Banks
Last week, we rounded up some reports from last fall that named some of the banks that AIG did business with on those credit-default swaps -- and therefore offered a first pass at where the fallen insurance behemoth's latest round of bailout money might ultimately be going.
But over the weekend, the Wall Street Journal offered some updated reporting (sub. req.) on that score. It obtained a confidential document listing banks that have been paid a total of roughly $50 billion by AIG, since it was first bailed out last fall.
Here's the Journal's list:
* Goldman Sachs
* Deutsche Bank
* Merrill Lynch
* Société Générale
* Calyon
* Barclays
* Rabobank
* Danske
* HSBC
* Royal Bank of Scotland
* Banco Santander
* Morgan Stanley
* Wachovia
* Bank of America
* Lloyds Banking Group
That includes $6 billion each for Goldman Sachs and Deutsche Bank.
As you can see, there's some overlap there with what we told you the Journal and the New York Times had previously reported.
But the new list shows how many of AIG's counter-parties were European -- a fact that's likely to add to frustration, among members of Congress and the public, that US taxpayer dollars are ultimately being used to save foreign banks from the consequences of their disastrous decisions to do credit default swaps with AIG. It's also likely to further fuel congressional demands that the federal government identify all of AIG's trading partners.
Josh
Zachary
I hope one response to this evidence of the globalization of banking is passage of federal laws stripping all American corporations and citizens/residents, plus all of the worlds's financial institutions, of the ability to hide their accounts from discovery in U.S. courts. The consequence of any financial institution refusing to reveal a legitimate request for information germane to a U.S. court proceeding would be immediate and automatic blacklisting of that institution as a depository of funds from any American business, citizen or resident.
I am sure this sounds draconian to some, but foreign accounts serve to deliberately shield these American entities from paying their taxes and from eschewing participation in many other illegal activities. Both sides reap billions of dollars. It is a criminal relationship. End it.
So we make Switzerland, a few Gulf states and some Caribbean islands unhappy. Are they unaware of the "service" they provide their "clients". I think not.
March 9, 2009 1:08 PM | Reply | Permalink
The more water you put in the pig pen the slopper it gets.
March 9, 2009 2:20 PM | Reply | Permalink
If we had good relations with other central banks and other governments, cross-border flows like this would not be a major problem. Bundesbank, Bank of England etc are perfectly capable of making similar billions flow back in the Fed's direction to even things out.
Oh, we're an international pariah state that's been largely ignoring relationships with our allies for the past 8 years, except to issue the occasional diktat? Could be a problem.
March 9, 2009 3:19 PM | Reply | Permalink
One thing I don't get about this. The banks have been paid out 50B, but AIG has gotten 160B in bailout money, and they have money coming in from their normal insurance business which is still profitable. So where did the rest of this money go?
March 9, 2009 3:43 PM | Reply | Permalink
The list is not complete. Remeber, individual wealth could be on the list.
March 9, 2009 4:12 PM | Reply | Permalink
All the more reason to insist on transparency and full disclosure.
March 9, 2009 5:38 PM | Reply | Permalink
Sunnysteve makes a very good point - transparency is vital to our financial recovery , and yes individual wealth could also be involved in the AIG "clusterf--ck "bailout plan . There must be some financial best practices path that will keep the 'markets ' whole , without wholly ripping off we the taxpayers . And if there is no way forward besides giving our hard earned tax dollars to the Counter Parties - then its even more important to know exactly who we are being forced to save ,how , & why . I for one will be not surprised if our former Senator Phil Gramm does show up as a Counter Party -that would be extremely appalling as Gramm made sure deregulation of banks was complete before quitting the Senate Financial Committee Chairmanship to become a top paid UBS lobbyist ( The same bank just convicted of helping set up illegal offshore tax havens. Also his wife Wendy was knee deep in the mark to market crap at Enron ) .
We often say here at tpm that the bushcheney years were proto fascist - rememebering our history the facist did not come to power in Italy and Spain until the bankers and other elites colluded to consolidate power.
Its my belief we have such a fact pattern here - that big banks were colluding with the neocons to bring us to the brink of fascism . If we can ever have a sincere thorough and complete investigation of the years 2000-2008 we will find criminal wrongdoing and a direct assault on our way of life from gwb43 . I also believe that the best way forward to attain the political will to have such an investigation would be to frame the issue in the context of best practices regarding spending tax dollars - put more simply -'exactly how did bushcheney rip off our hard won tax dollars' Follow the money - from the no bid contracts in Iraq , to MZM , to now the TARP looting of the Treasury - in short we make this a non partisan investigation ( if it leads to Murtha too then so be it ! ) - every citizen no matter which party affliation is bone tired of being ripped off.
Yes Sunnysteve we need transparency -lots and lots of sunshine to disinfect this proto fascist boil on our body politic ...
March 10, 2009 5:20 AM | Reply | Permalink
Can anyone tell me why AIG has not been "intervened", taken over, nationalized, whatever?
March 9, 2009 8:19 PM | Reply | Permalink
Aside from academics/economists, can anyone name a US taxpayer without a job related to finance or holding bonds that does not wants bondholders to take the loss as opposed to US taxpayers? how many academics/economists hold dual citizenship and if so what country?
Academics/economists = neocons of 8 years ago?
March 10, 2009 12:29 AM | Reply | Permalink