Billions and Billions Served

The Wall Street Journal reported on Friday that almost $50 billion of the $173 billion that the U.S. government allocated to rescue American International Group Inc. (AIG) has been doled out by the company to two dozen U.S. and foreign financial institutions. More shockingly, the paper says that 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.

We have enough trouble accepting the Pentagon’s abuse of opaqueness in the name of U.S. national security. How difficult is it to stomach AIG and their derivative counterparties protected in the name of economic security by the Federal Reserve?

Banks paid by AIG since the insurer started getting taxpayer funds in 2008 include: 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. Most of these have themselves received some form of taxpayer assistance from the U.S. and various foreign governments.

The paper quoted Federal Reserve Vice Chairman Donald Kohn in testimony before the Senate Banking Committee saying “revealing names risked jeopardizing AIG’s continuing business.” Kohn went on to say there were millions of counterparties around the globe, including pension funds and U.S. households. Curiously, Kohn volunteered that the intention was not to protect AIG or its counterparties, but to prevent the spread of AIG’s infection.

It is criminal that no public paper trail of taxpayer monies spent is generated by the Federal Reserve. Who is protecting the U.S. taxpayers for this failure of oversight—the Senate Banking Committee?

America has preached transparency and good governance to emerging democracies for years. It’s about time in this economic crisis that we started to practice what we preach, beginning with the Fed.

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AIG Bonuses Outrage Obama[Al Jazeera]

$165 Million Going to AIG Bonuses Under Obama Adminstration [NY Times]

Who’s Got AIG’s Billions?

~ by deadmanscurve on March 8, 2009.