Article

2009-03-19 Home Front Economy

Congress in a lynching Mood: Steve Chapman

Archived material is restricted to Rantburg regulars and members. If you need access email fred.pruitt=at=gmail.com with your nick to be added to the members list. There is no charge to join Rantburg as a member.

Posted by mom 2009-03-19 10:05|| || Front Page|| [3 views ] Top

#1 The real sin is getting into a $170 Billion hole and expecting us to bail them out.

Throughout this discussion never forget that AIG was responsible for conceiving the Credit Default Swap and the regulations surrounding them. They were warned from the beginning that these contracts were very volitile and needed reserves held against them. But that would have lessened profits.

So after showing criminal disregard for the risks they took, they now demand to be bailed out by the taxpayer. Actually the bonuses are important since awarding them would mean these white collar criminals have done nothing wrong. It is not the S165 million. It is the symbolism.

Posted by Frozen Al 2009-03-19 11:40|| 2009-03-19 11:40|| Front Page Top

#2 "Nothing more" than "legally due" is BS. AIG is a criminal enterprise, as far as I'm concerned. From the 26 February 2009 AIG paper titled "AIG: Is the Risk Systemic," p. 3 "The failure of AIG would cause turmoil in the U.S. economy and global markets, and have multiple and potentially catastrophic unforeseen consequences." That's a terroristic threat, IMO. Sic the DHS on 'em.

Posted by Anguper Hupomosing9418 2009-03-19 12:51|| 2009-03-19 12:51|| Front Page Top

#3 If anyone is really interested in the nitty-gritty details of how the whole kittin-kaboodle financial crisis originated then I suggest you get this book and start reading. You may have to take notes along the way since it is very technical in structured finance and derivative theory but also spot on. AIG comes off as the Enron of the 21st century.

Posted by Jack is Back!">Jack is Back! 2009-03-19 13:08|| 2009-03-19 13:08|| Front Page Top

#4 I'm from the government and I'm here to help you.

I guess that is called an oxymoron or at least some kind of moron.

Posted by JohnQC 2009-03-19 13:26|| 2009-03-19 13:26|| Front Page Top

#5 That's a terroristic threat, IMO. Sic the DHS on 'em.

No, unfortunately it's simply a statement of fact. Deutsche Bank and others used AIG and credit default swaps to whitewash their balance sheets and circumvent regulatory capital requirements.

If AIG had failed formally, it would have required DB, Royal Bank of Scotland and the others to restate their balance sheets officially all at the same time. At which point they would all have been required not only to stop lending but also to dump their own equities and all assets they held onto the market to raise capital.

In such a scenario those assets would be worth very little with the result that the whole international banking system would have come crashing down, within days not weeks. With the result that the 30s depression would be remembered fondly as good times.

For instance, credit cards would be cancelled for the vast majority of consumers. We've become used to instant credit, so most consumers don't read the agreements that allow banks to jerk that credit very very quickly. Ditto for home equity loans etc. Meanwhile there would be a run on the banks as consumers attempted to withdraw savings and electronically deposited paychecks only to meet with withdrawl limits or outright refusal.

It wouldn't take long until shops closed doors, followed immediately by the supply chain companies that stock their shelves.

etc. etc.

Posted by lotp 2009-03-19 15:16|| 2009-03-19 15:16|| Front Page Top

#6 Thanks, lotp, for providing a healthy daily ration of perspective.

Posted by mom">mom 2009-03-19 15:39|| 2009-03-19 15:39|| Front Page Top

#7 CDS have two sides... one who sells them without having the funds to honor them and the other side who buys them knowing all that.

And yes government (both parties) failed to regulate them. Just like legalizing a Ponzi scheme.

Posted by European Conservative 2009-03-19 16:04|| 2009-03-19 16:04|| Front Page Top

#8 It may not matter, anyway.

Posted by SR-71">SR-71 2009-03-19 16:42|| 2009-03-19 16:42|| Front Page Top

23:41 mom
23:36 Ricky bin Ricardo (Abu Babaloo)
23:29 Halliburton - Mysterious Conspiracy Division
23:08 citigirl
23:05 Thing From Snowy Mountain
22:55 Alaska Paul
22:46 Alaska Paul
22:40 Cyber Sarge
22:34 Mike
22:31 Pappy
22:18 newc
22:14 tipper
22:12 Pappy
22:10 tu3031
22:06 KBK
21:55 KBK
21:22 Old Patriot
21:10 Rambler in Virginia
20:55 Whineter Sproing9941
20:54 Deacon Blues
20:47 Bright Pebbles the flatulent
20:39 Mike N.
20:34 Mike N.
20:30 Nimble Spemble