Tuesday, March 17, 2009

Atlas Insurance Group, pt 4

It's fine to get "outraged" and "all het up" about the AIG bonuses, but they are merely symbolic of the real scandal that has been playing out there since last September. You can read the amateur version of the scandal by clicking the AIG link on this blog, but you should also go here to read the professionals at the W$J describe the real AIG outrage.

Since September 16, AIG has sent $120 billion in cash, collateral and other payouts to banks, municipal governments and other derivative counterparties around the world. This includes at least $20 billion to European banks. The list also includes American charity cases like Goldman Sachs, which received at least $13 billion. This comes after months of claims by Goldman that all of its AIG bets were adequately hedged and that it needed no "bailout." Why take $13 billion then? This needless cover-up is one reason Americans are getting angrier as they wonder if Washington is lying to them about these bailouts.

They also touch on something that I have begun to wonder: what is the connection between the Spitzer-induced resignation of Hank Greenberg and AIG's present state? Was his loss a boon or a bane for AIG and its fraudsters, or for us? And, what exactly was Spitzer driving at? He made all sorts of wild accusations, but then dropped them without explanation. Why? Given how things have played out, I have a lot more sympathy for the Spitzer position (it kills me to admit this, I assure you), but Greenberg sincerely seems to believe that AIG was destroyed precisely because he was not there to restrain the worst impulses of its management. This requires more thought

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