Spitzer: AIG Cooked the Books To Inflate Capital
In Eliot Spitzer's first interview since he resigned as New York's governor, he tells Fareed Zakaria that the problem with Wall St. isn't the individuals involved, but a culture that sought greater and greater returns without taking any of the risk. He also says he hopes Barney Frank will look more closely into the payments to Goldman Sachs via the AIG bailout funds:
FAREED ZAKARIA: So, do you think that the problems that AIG got into later on stem from some of the same practices that you were trying to get at?
SPITZER: They stemmed from an effort from the very top to gin up returns whenever, wherever possible, and to push the boundaries in a way that would garner returns almost regardless of risk. And so, to the extent that there is a discussion, did this begin before or after the tenure of Hank Greenberg, it's unambiguous -- unambiguous that the structures and the flaws and the policies began while he was there. That is why the board that he had controlled with an iron fist asked him to leave. It was their decision -- not my decision, their decision -- to ask him to step down, something that was then and is now very unusual.
He has invoked the Fifth Amendment, which, of course, is his right to do. But he was asked to leave by his own board, because they saw the flaws and the problems that have since multiplied and created this monster that can bring down the financial system.
Back then I said to people, AIG is at the center of the web. The financial tentacles of this company stretched to every major investment bank. The web between AIG and Goldman Sachs is something that should be pursued.
And as I have written...
ZAKARIA: Meaning what? Meaning that a lot of the money that we the taxpayers gave AIG has ended up being paid to Goldman Sachs...
SPITZER: Precisely. And...
ZAKARIA: ... and other companies.
SPITZER: The so-called counterparties to these very sophisticated financial transactions.
When AIG initially received $80 billion -- a decision that was the consequence of a very brief meeting of the president of the New York Fed, the secretary of the Treasury, perhaps Chairman Bernanke and arguably, some reports say, the chairman of Goldman Sachs -- $80 billion, virtually all of it flowed out to counterparties, $12.9 billion to Goldman Sachs.
Why did that happen? What questions were asked? Why did we need to pay 100 cents on the dollar on those transactions, if we had to pay anything? What would have happened to the financial system, had it not been paid?
These are the questions that should be pursued. Look, bonus is a real issue. It touches us viscerally. The real money and the real structural issue is the dynamic between AIG and the counterparties.
ZAKARIA: Because those payments are in the tens of billions of dollars. The bonuses are a few hundred million.
SPITZER: The bonuses we think are $164 million, give or take -- huge money. I mean, nobody should diminish that. These counterparty payments, tens and tens of billions of dollars.
ZAKARIA: And it, to your mind, it seems as though this taxpayer money may have been recklessly and unwisely paid off?
SPITZER: Well, it may be that a case could be made that it should have been paid.
But at a moment in our nation's history when everybody is being asked to bear a piece of the burden -- everybody -- people are being told work four days a week, not five. Sales taxes are going to go up. Contracts are being broken and renegotiated for workers across America. Our 401(k)s and our savings have been depleted by the recklessness of Wall Street.
For Goldman and the other counterparties not to be able to say, we can make do with only 50 cents on the dollar, 30 cents on the dollar, after we've already given Goldman a $25 billion cash infusion, they are sitting on vast amounts of cash on the sidelines -- which is their right, but they're going to invest it in due course, based upon their judgment -- for them, on top of all that to get another $12.9 billion in the dark without questions, after a meeting of this sort, is fundamentally wrong. And that is the nature of the inquiry that should be raised.
ZAKARIA: Is there, as far as you know, a congressional inquiry into these monies?
SPITZER: I do not know if there is or isn't. I certainly hope that Barney Frank, who is the chairman of the right committee, will do so. He's a brilliant guy, a spectacular legislator and lawyer. I have absolute confidence that if he pokes at this, he will get to the bottom of it.
He is somebody -- there are many on Capitol Hill who are beating their chests so loudly, you know it's just a cover-up of their neglect and failure over the last decade. They sat there and watched and did nothing, as they clearly should have known that we were building a system that was a house of cards. And they enjoyed it and prospered from it, and there was a symbiotic relationship between them and Wall Street.
Barney Frank is not one of those. Barney Frank will ask the right questions, and I hope he does.
(See rest of transcript here.)
Everyone knows Spitzer had heterosexual intercourse out of wed-lock.
Corruption favors the wealthy.
As they say in Washington, you'll be alright as long as you are not caught with a live boy or a dead girl.
Since he was caught with a live girl, he will eventually recover and make a comeback.
This interview is the beginning.
one day. I reckon he might have ran with Obama, had he not been targeted.
I don't know why he allowed himself to be caught up in a sex scandal, but he's got a duty to his country over politics and over money that we need more of.
I still think it's suspicious Spitzer was busted right before all the cards fell - and the added fact the the "Patriot Act" was used to spy on hookers instead of terrorists is even more obscene. I wish Spitzer was investigating these corrupt people.
In the words of Michael Franti, "I don't care who they're screwing in private, I want to know who they're screwing in public."
Hopefully humanity will one day learn to be humane.
Spitzer was a bulldog when it came to Wall Street. You're absolutely right about the timing. How many of us...excuse me...how many people pay for prostitutes and there is no federal investigation? Spitzer was wrong, but he did nothing less than David Vitter did. Where's David Vitter right now. Aaahhhh, he's still a US Senator. A Republican US Senator who was one of the most vocal critics when it came to Clinton having consensual sex with a woman with no money changing hands.
is intended to be a factual statement
I never tied the two together New
Mon, 03/23/2009 - 16:27 — gump
________________________________________________
That costs extra.
Diabolus est Deus Inversus
Sorry, can't afford it.
is intended to be a factual statement
And can put you in a taxing position. :-)
Study the symptoms not the virus...
and how did the wiretaps become so public so quickly?
the same way boosh attorneys targeted Dems all over the country: Newark mayor, Detroit mayer, NY Gov, New Mexico Senator - All Democrats.
NOT ONE MAJOR REPUG WAS INVESTIGATED BY THE BOOSHIES IN THE JUSTICE DEPT. ONLY DEMS. AND IF THEY FOUND NOTHING, THEY WOULD REPORT RUMORS AND LIES.
They kept C&L busy and AirAmerica and Olberman as well.
Some stuff you can't make up!
Do the research; Spitzer as Attorney General was pursuing Banks lending practices as were other states; The Bush Justice Department Sued them to prevent their investigations the Case went all the way to the Supreme Court where Banks Won; naturally.
Spitzer as Democratic Governor became too powerful to ignore; he had to fall and it was the same Justice Department that Leaked the hooker story to the news.
Donaldd
Spitz was brought down because of all he knows, and what he could do with that info, pure and simple......anyone can see that. Hope he takes 'em all down......he's a smart man. He's kinky in an oogie kind of way, yet brillant. Funny, how evidence has been around for years about a certain ex-prez (R) who liked boyz, yet his rep. remains golden. His influence must be extremely vast, and lethal.
I'm delighted to see someone refer to a Franti song.....he's a joy to behold........"Drums and bass mash up the place".........or...."I don't need a passport to walk on this earth"........LOVE HIM!!!
Hopefully humanity will one day learn to be humane.
By Eliot Spitzer
Thursday, February 14, 2008;
Predatory Lenders' Partner in Crime
How the Bush Administration Stopped the States From Stepping In to Help Consumers
In case anyone missed it?
Snip - "Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders."
[ http://www.washingtonpost.com/wp-dyn/content/... ]
PS. Nice Find Susie! :-)
Study the symptoms not the virus...
Why wouldn't the banks want people to default. They pay their mortgage for 5 6 7 8 or even 20 years. Can't make the payments the banks get all that interest, the principal paid and a shiny new house that's worth more than for what they took the mortgage out for. That is if they didn't buy it in the past three years. The banks could make tens of thousands on a defaulted mortgage. So they thought. The bubble burst and they're holding something they can't sell. And here we are.
is intended to be a factual statement
To quote your post:
Author F. William Engdahl advises that, “in evaluating spectacular scandals around prominent public figures, it is important to ask what and who might want to eliminate that person.”
I have read in the past few days that THE DAY AFTER Blogoyavich stood with that company in Ill. that was shutting down and he threatened citibank in his state. I think it was a way of cutting him off from cutting them off. Not a fan, but we all saw the difference a day made for him. Remember, everyone?
Extramarital sex?
Book cooking?
IOKIYAR!
On the weekend of September 12, Paulson was in negotiations with buyers for Lehman and Merrill. He promised the buyer of Merrill an illegal tax giveaway, section 382. Here in WaPo.
This $140 billion giveaway made the Merrill deal very attractive. Why no such guarantee for the potential buyers of Lehman.
This is the precise same time Geithner, Paulson and it is reported, the CEO of Sachs who was owed billions, were meeting on the AIG bail out. This was a loan from the FED. It was before the $700 billion 'Bailout' of 10/1/09.
Letting Lehman fail has shock doctrine written all over it, in my mind. Paulson was the consummate insider, he knew what probably would happen when Lehman went down. It gave cover to get the money for Goldman, his buddies.
These are questions that should be explored.
statusquObama, change you can only pretend in
Snip - "On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS."
Study the symptoms not the virus...
It would appear author of The Predator State James Galbraith you recommended to me as required reading isn't all too happy with Geithner's scheme either, thought you might enjoy this video. I certainly agree with his position on this.
Part I: Geithner's Plan "Extremely Dangerous," Economist Galbraith Says
http://finance.yahoo.com/tech-ticker/article/...
And he wrote this today as well
This Crisis Is Way Bigger Than Dead Banks and Wall Street Bailouts
By James Galbraith, Washington Monthly. Posted March 23, 2009.
http://www.alternet.org/workplace/132849/this...
Goodnight, Frau Blücher
Thank you!
I knew of the Washington Monthly piece but the Yahoo interview was new to me.
Galbraith, Hudson and Black are my go to people. They are the ones that repeat the theme of the fraudulent originations and ratings in the securities that Paulson and now Tiny Tim wants to pass off on the tax payers.
We have already been shafted and we will be shafted some more before this is done.
statusquObama, change you can only pretend in
And how many years had Spitzer already been digging into this very thing?
Barney Frank has had 5 years to ask the right questions, the last 2 as Chair of that committee...
The RIGHT questions have STILL NOT BEEN Asked.
Sorry, Barney Frank is not the answer, and quite possibly, part of the problem.
ess for
Look to 2000 and Paulson (as GoldmanSachs Chair...) lobbying congress for a relaxation of the capital to debt ratio required for banks regarding investment risk.
Then
Look at 2003 and an Office of Comptroller of Currency ruling that usurped state's rights in terms of financial crime.
Coupled with a Bush Admin expansion of who's allowed to participate in CRA loaning in 2003.
Finally, Ask Cox at the SEC why they were, by philosophy, asleep at the wheel.
You all need to read Greg Palast a bit more...
.
Q U E S T I O N:
Legal question, that is...
... If AIG cooked the books and defrauded America out of the TAX PAYER'S MONEY, do the terms of the TARP for AIG and subsequent pay-outs made to AIG have a legal leg to stand on?
.
Starve the WAR Beast...
... Feed Americans.
AIG did NOT recognize losses by not having capital to cover insured bonds. this is indeed "cooked books"
cheating/fraud. there NEEDs to be consquences. i say Frank is a guy i want in the mix.
Spitzer touches on the real issue, how financial institutions have been taking advantage of the system for some time now through the politics of deregulation and laissez faire capitalism. To focus on just the bonuses is missing the key point. Our two party political system is so corrupted by the huge wall street lobby it is extremely unlikely that the fundamental changes needed will be put in place. Big money and the MSM want the focus to be on the bonuses so were diverted from exposing all the dirty laundry and making substantive change.
Obama naming and sticking with Geitner is a nod to the head honcho's on wall street that if they wait this out, they'll be able to play their games again soon enough. This toxic asset plan doesn't change anything, instead it just changes the landscape a little but allows hedge funds to continue to play with house money.
Obama is not handling wall street effectively and is letting Republican's play the populist card which is so hypocritically disgusting it makes it hard to put the tv on.
The outcry about the bonuses is a distraction.
Sure the bonuses are obscene. The salaries are obscene.
But they are the proverbial drops in the ocean compared to the TRILLIONS of $$$ already thrown into the black hole these financial wizards created.
Democracy is too important to be entrusted to politicians.
Rise Up!
Protest!
you may be correct but i still say it's too early to say obama and his team are NOT effectively handling wallStreet. no doubt, there is plenty of coverage regarding the "bonuses". this may be red meat for the public. i still say there is plenty of interest regarding the real story but being patient is very important to unravel this multi- faceted/player crisis. like BUSH many on wallStreet(not all) covered their asses before they did anything. like i said, i could be wrong but there should be and needs to be consequences for those that committed FRAUD. this financial crisis has had systemic results. unfortunately by design many don't understand this crisis. that's why the media kept hammering the public about people who had subprime loans. this problem is much bigger than sub prime loans. but talk to people on the street that's what they believe. that subprime caused this problem. that's nonSENSE.
The checks have been cashed already. Obama could have fought waaaayyyyy harder to make sure every cent would be accounted for. Besides the bonuses, money is already being laundered though foreign banks to go right back to wall street insiders. The rigging continues. That's the point, he needed to make sure all the dirty laundry on wall street was known before going forth, as much for political leverage as for effective systemic change. Instead you've got Chris Dodd (whose been in bed with Big Ins for decades) and Geitner looking like pawns in front of the media blaming each other for last seconds amendments. It's a freakin fiasco, and it's giving the Right ammunition.
Obama balked first and now wall street knows the game, hence were starting to see a turn around. Obama is desperate for the dow to go up, and so he's starting to really cave to wall street demands. It's sad. Obama should be ignoring wall street right now, it's still a house of cards trading on speculation. This should all be about changing the financial institutions away from being casinos and back into investing in manufacturing and infrastructure. He's not calling for this kind of change.
I want Obama to succeed, but not at the expense of not seeing real fundamental change, and that's not what were getting. Obama is proving to be more Clinton than FDR.
Obama will go a long way with the public if he makes it clear that, where there is fraud, it will be prosecuted. He deflected this twice, once with Leno when Jay asked 'Shouldn't someone go to jail for this?' and again with kroft last night...I am hoping he has told Holder to make the cases and make them stick....starting with cassano at AIG...
There should be some serious perp walking..this is a whole lot more than 'mistakes were made'
he needs to get a special prosecutor to get the other criminals:
Cheney, Bush, Rumsfeld, et al.
"Egotism is the anesthetic that dulls the pain of Stupidity" - Frank Leahy
His tryst would have been a family matter.
Strange how we conflate private sexual matters with professional competence and good governing.
One would think we would want our leaders sexually satisfied and clear headed to take on the difficult task of governing.
Like a week before he was so timely busted. Coincidence? I think not.
we all knew it at the time...but most didnt know how deep the shit was
think about it...a fed investigation into hookers?>???? never happens
using the patriot act to monitor a private citizen with no priors on how and why he is funneling rather small sums of money?
god, i wish these smart guys would learn that when you are going after big and dangerous people, you work to make yourself squeaky clean
but i would still like an investigation into how and why the patriot act was used to bust a prostitution ring....i think if we end up following the money and the orders, it will go right to bush and cheney
cuz spitzer was about to get the goods on the entire crime cabal...and the crash may never have happened
I am, however, not satisfied I want some answers.
Smoke and mirrors, and dirty tricks,
A lot of folks are paying close attention.....
LuLu
Spitzer's slate.com blog is.
I wanna join in the fun with conspiracy theories, but Eliot knew the lay of the land (intended), so to speak, when he let his little head do all the thinkin' for him outside the office.
But I do agree with a poster above who said that the hooker thing would and should be a private matter in a more enlightened country.
Did the AIG guys set Spitzer up or was it the Bushies who shut him down. He was getting too close for comfort when the whore deal came out. Timing is everything and whatever happened to the DC Madam list of phone numbers? Call girls and DC. Give me a freaking break.
Listen to this recent interview with Brian Lehrer if you want it "straight from the horse's mouth"
http://blogs.wnyc.org/news/2009/03/18/eliot-s...
I'm assuming the set up by his penis and the republican/wall street machine will humble him enough to make him seem a little more human. That may very well help him in the long run, although by derailing his investigations, the country will certainly be paying for a long time to come.
...the words "sophisticated financial instruments" in any sentence - it means big time FRAUD. Spitzer had these guy by the balls way back, until they yanked his.
I say let him and Cuomo do the investigation of this entire financial cabal and fix the mess once and for all...
"Egotism is the anesthetic that dulls the pain of Stupidity" - Frank Leahy
Spitzer is investigating Wall Street but Bush's US Attorneys investigate Spitzer and Seigelman. Funny how US Attorneys who wouldn't do politically motivated investigations got fired.
and enlightening interview.
But, honestly, who is so stupid as to compromise their position? You'd think this erudite guy never heard of exposès.
Weren't you the AG, then Governor of New York State? The state where Wall St. lives?
Since when is paying off debts a criminal offence? AIG is an INSURANCE COMPANY who supplied coverage for financial institutions, amoung other things. What the hell else are they supposed to do with the money they got? THEY OWE money on loses!
And if the government has a problem with how they paid their debt, perhaps you should of thought of that before providing the money. I guess its easy now to blame the evil people in finance when your government ass is in a sling. TAKE SOME OF YOUR GOVERNMENT MONEY AND BUY A CLUE!
You were exposed awhile back, remember?
[ http://crooksandliars.com/david-neiwert/glenn... ]
Your interest on this issue speaks for itself and you...
PS. And unless you change your name/identity like most criminals do, that's the last of my time, I'll waste on you "Suzie Gadfly", chow!
Note:"The massive insurance operation will henceforth be known as AIU Holdings, Ltd., a process that began this past weekend with the removal of the large, front-end AIG sign from the its Manhattan office".
Amended: "In 1996, Morgan Stanley acquired Van Kampen American Capital. On February 5, 1997, the company merged with Dean Witter Reynolds, and Discover & Co. the spun-off financial services business of Sears Roebuck. The merged company was briefly known as "Morgan Stanley Dean Witter Discover & Co." until 1998 when it was known as "Morgan Stanley Dean Witter & Co." until late 2001"...
Study the symptoms not the virus...
"“If AIG went down,” he says, “there was a good chance Goldman would not be able to collect.” The AIG bailout, in effect, was Goldman bailing out Goldman." The Big Takeover by MATT TAIBBI at Rollingstone.com
http://www.rollingstone.com/politics/story/26...
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~GOLDMAN SACKS-USA
Although the Term is not used in the clip; It is exactly what AIG is doing; Laundering Money for it's customers including foreign banks that do not qualify for our bailout money.
Donaldd
Yup, Spitzer (and yes he WAS dumb to have been doing what he was doing) was 'caught' just in time....right after he had an op-ed about Wall St.
I'll bet no one ever read THAT, either. Too busy salivating over his....um...."indiscretions" ...and a whole lot more fun and a lot less boring than all that financial figures and stuff!
http://stonezone.com
The idea of former New York Governor and Attorney General Eliot Spitzer criticizing the AIG bailout and bonus in a recent column for SLATE is ironic: Spitzer is responsible for the economic condition of the company for which they need a bailout.
In fact, Spitzer's crackdown on Wall Street caused the firms to increase leverage because he took away the ability for them to make money in research and underwriting, and they looked for other ways to make money-like securitizing subprime mortgages.
In fact, if Spitzer hadn't removed Maurice "Hank" Greenberg from AIG, the company would never have crashed. Greenberg was a much more conservative investor and had tighter risk management rules that were suspended by the company only after Spitzer drove Greenberg out over charges that proved bogus in the courts.
The billion dollar investment in credit default swaps which were not hedged brought the company and the economy down. This insurance was written only after Greenberg was forced out and never would have been written under Greenberg's risk management rules. Thus, Eliot Spitzer is partially responsible for the current economic crisis, not some Boy Scout crying an early warning.
This is so typical of his reign as Attorney General where he blackmailed companies by press release, threatening to destroy your company's value unless you pled to infractions you hadn't actually committed. Most saw the futility of winning in court after Spitzer had destroyed their company so they settled. When cases actually went to trial most were dismissed or those Spitzer apprehended were acquitted.
Spitzer's assault on the New York Stock Exchange's Ken Grasso, Ken Langone and Greenberg, while not also pursuing NYSE board member Carl McCall for fear of offending key African American political leaders, stands out as the kind of perverted justice Spitzer pursued. Spitzer made base-less charges against Greenberg, drove him from the company and set the stage for AIGs collapse.
Comments are closed on this entry