"..the numbers are just astronomical. The initial payment was $80 billion, and there have been subsequent payments bringing it up to about $183 billion, which to put it in perspective is larger by significant percentage than the entire budget of the state of New York for the fiscal year, but for much of that money, AIG was a conduit. It was given to AIG, and AIG then shipped it on through to other firms. My question is, when the group got together, and as we best understand it, it was Mr. Bernanke and Tim Geithner and Hank Paulson, and Lloyd Blankfein, I think was there as well, the CEO of Goldman. When they got together last fall and decided very, very quickly that AIG needed $80 billion. Why did they make that determination? That is the issue Congress should be probing."
Spitzer's comments have been echoed by many on Wall Street and in business media. The Street.com reports that $22.4 billion of $118.4 billion government capital infusion was given to a dozen financial firms that includes Goldman, BofA and J.P. Morgan....
...Spitzer told WNYC radio politicians who focus on the huge bonuses paid out by AIG are missing the larger picture.
"The bonuses are the flavor of the month," Spitzer said. "You see the word bonus in a headline, someone gets a subpoena two minutes later."
Cuomo has led the charge against the bonuses AIG paid out after getting a taxpayer-funded bailout.
"This is typical political screaming and shouting and missing the larger issue," which, he said, is that AIG is funneling bailout money to cash-rich firms like Goldman Sachs and Bank of America...
Goldman holds fire on repayment (click here)
Goldman Sachs has yet to speak to the US Treasury about repaying its $10bn (£7bn) preferred equity stake despite its desire to pay the funds back.
By James Quinn, Wall Street Correspondent
Last Updated: 5:23PM GMT 18 Feb 2009
The Daily Telegraph has learnt that there have been no conversations between Treasury officials and Goldman management on the subject and none are scheduled.
Two weeks ago, Goldman chief financial officer David Viniar declared that the bank would like to repay its TARP money by the end of the year, but gave no timetable.
Since then, speculation has increased about when Goldman will make its move, given the pay restrictions the bank may have to impose if it holds on to the money.
Of the restrictions, Mr Viniar said Goldman wanted "to get out from under that" by the end of this year and could issue preferred shares to private invesotrs to replace the government funds. Goldman declined to comment.
Repayment of the funds - which brought with them restrictions on bankers pay and bonuses, following 11th-hour amendments to the $787bn fiscal stimulus bill - is subject to approval by the Treasury and regulators, including the Securities and Exchange Commission.
In addition, before Goldman can repay the money, it has under the terms of the agreement to raise the same amount from the private markets, something which remains difficult given the uncertainty in the capital markets....
Eliot Spitzer: We were approached by some sources who said that AIG (click here for audio), which was at the time guided by Hank Greenberg as CEO, was, to speak in street vernacular, juicing its books by creating false reinsurance contracts that would appear to add capital to its balance sheet. Now that sounds all very complicated but, what it really means is they were playing games with their accounting in order to look stronger than they were. Hank Greenberg, there are tapes that prove this, was very, very concerned with any, even minor, fluctuation in their stock evaluation.
These contracts, it was alleged, were designed to make them look better in the eyes of Wall Street. We investigated, brought a civil case to settlement of $1.4 billion. At the time, $1.4 billion seemed like a lot of money. It was the biggest financial settlement ever. The board removed Hank Greenberg because he invoked the Fifth Amendment, when he was asked about this. Four people were charged criminally and convicted for basically playing games. But it lead us to inquire and to probe into the inner workings of the company and what we saw was a mess....
Currently, Wall Street entities would like to divide AIG into 'separate entities.' Wall Street would like to sell off the profitable insurance structure at AIG to MetLife or other companies able to take over that aspect of the company. As soon as the insurance section of AIG is sold off, the 'securities' entity will fail because there is no viable income from that end of the company.
The current CEO whom have dedicated some retirement days to overseeing AIG into solvency for the American people, believes as soon as the securities are dissolved, AIG will be a profitable business with incomes over one trillion per year.
It is in the best interest of the American people that AIG remain intact and pay back the loans extended to the company.
If Wall Street has its way, when the insurance sector of AIG is sold, the 'bill' to the American people will be left unpaid as soon as the securities division fails.
If AIG comes out of this crisis as a viable insurance company with global reach, it will employ people into retirement for decades to come.
There needs to be profound changes made in the culture of Wall Street. To date, nothing has changed because someone has 'brain washed' the federal government that it would be better not to change anything in a crisis. It's nonsense and sincere regulation needs to take place along with a new culture of 'truth' and 'benevolence.'
...The Wall Street Journal Editorial Page, I think everyone should keep in mind speaks to an ideology that is precisely the ideology of that last 10 years that got us to where we are. Never wanting a regulatory framework that would require either adequate capital, reasonable controls, or an examination of the types of remarkably outsized risks that we are talking about. So you have a clear ideological choice to be made here. Either The Wall Street Journal Editorial Page or the one that I think we are all now gravitating towards which is sound, reasonable regulation....
By Eliot Spitzer
Posted Tuesday, March 17, 2009, at 10:41 AM ET
...The appearance that this was all an inside job is overwhelming. AIG was nothing more than a conduit for huge capital flows to the same old suspects, with no reason or explanation....
