（瑞士‧達沃斯29日訊）中國代表團在世界經濟論壇（WEF）的影響力日增，甫在瑞士召開的達沃斯論壇，更在成立41年來首度以中文作為官方分論壇使用的語言，突顯中國經濟實力在各國眼中的分量。
論壇主席瓦布表示，中國崛起是本次論壇核心議題，本屆論壇與中國相關的分論壇就包括“洞察中國”、“中國企業的未來”、“中國對世界經貿增長的影響”及“現代中國的新現實”等4場，為歷年來最多一次。
其中“中國企業的未來”更破天荒全程使用中文發言，吸了許多歐美企業家前來聆聽。
但《華爾街日報》卻指出，與會者聽到的不是中國私營企業艱難生存的寶貴建議，反而是接受了一場為中國經濟辯護的說教。
聯想集團董事長柳傳志會後接受中國中央電視台專訪時稱，中國企業的未來，確實還有很大的不確定性，這要看世界經濟情勢及中國政府的對策。
（埃及‧開羅29日訊）埃及局勢急轉直下，全國爆發反政府示威，示威者未有理會宵禁令和軍方介入，入夜後繼續示威。坦克並首次開上街頭平亂。面對危機升級，埃及總統穆巴拉克週六終於首次露面發表電視演說，誓言進行民主改革，並要求內閣辭職，但是他堅拒下台。
但在穆巴拉克發表全國講話後，示威者無視宵禁令，成群結隊返回街頭抗議。他們指，內閣辭職並不夠。
一名示威者便說：“這並非政府的問題，你（穆巴拉克）才是那個必須下台的人！你對人民的所做所為已經夠了！”
週六早上，示威者仍在街道舉行抗議，一些人也趁火打劫。首都開羅的的部份地區宛如戰場，充斥著濃煙和催淚彈。
至少27人死逾千傷
醫護人員指出，開羅、蘇伊士及亞歷山大的衝突造成至少27人死亡，逾千人受傷。
埃及這場前無所例的大規模示威震撼整個中東地區，也引發全球市場震蕩。
穆巴拉克週五晚下令，即日起對開羅、蘇伊士及亞歷山大3個城市實施宵禁，軍方首次加入維安，坦克和裝甲車開上街頭，徹夜在開羅市中心的解放廣場進行清場。
週六凌晨零時，表情木然的穆巴拉克在通過國家電視台轉播的演講中表示：“今天已經要求內閣宣佈辭職，明天就會組建新政府。”他說：“我們的改革不會走回頭路。我們會持續新的步驟，確保司法獨立，強化法治並且讓公民有更多自由。”
他並表示將“遏制失業，提高生活水準，改善服務，站在窮人這一邊。”
穆巴拉克稱，要解決問題，需要的是對話而不是暴力。他並指責反政府示威是個陰謀，企圖令國家不穩，以及摧毀埃及合法的現政權。
穆巴拉克也對示威活動中出現傷亡，表示遺憾。他還承諾以此次示威為契機推進政治、社會、經濟等領域的改革。
兩週前，突尼西亞總理本‧阿里遭對國家經濟和政治現狀不滿的民眾推翻後，掀起了一波革命浪潮，除埃及外，也門、阿爾及利亞、蘇丹和約旦都爆發反政府示威。
（台灣‧台北29日訊）15年前發生在台灣空軍作戰司令部營區廁所的5歲謝姓女童遭姦殺案，檢方重啟偵辦，發現已鎗決的被告江國慶是冤死的，真正涉案人是同營區士兵許榮洲，週五當庭逮捕。
許榮洲承認單獨犯下性侵案，因女童哭喊，用手摀住她口鼻，他發現女童沒氣息，嚇得把女童屍體丟到廁所窗外。
許榮洲說，他只見過江國慶，彼此不認識；對江國慶被錯殺感到不好意思，但擔憂自己被法辦，所以拖了這麼多年才承認。
當年軍方在命案現場採證，發現一張衛生紙沾有女童血跡及江國慶的精液，成為江被判死刑的關鍵證物。但檢方如今查出，江曾到廁所自慰，噴到垃圾桶的衛生紙；女童被姦殺時，血跡也濺到衛生紙。
檢方對比現場跡證，確認廁所窗戶留有許榮洲擦抹血痕的掌紋，而血跡和女童相符，當年鑑驗過程顯然有要命疏忽。
江父奔波喊冤十幾年
事發於1996年9月12日，軍方在11個月內完成起訴審判程序，迅速鎗決江國慶。
江國慶的80歲老父江支安多方奔波喊冤十幾年，監察院去年5月公佈江國慶遭錯殺的調查報告，但不到1個月，江支安就含恨而死。
（澳門29日訊）賭王何鴻燊家族爭產戰愈演愈烈，事件不但轟動港澳，更已觸動北京政府神經，憂慮賭王家族內耗將導致澳門賭業由美國資金壟斷。
據瞭解，北京政府擔心情勢一旦失控，會令作為澳門經濟命脈的賭博業失去平衡，變成由外資壟斷，影響澳門的長遠繁榮穩定以至中央利益。
消息指出，中央早於何鴻燊健康抱恙前已關注“兩何後”（即澳門前特首何厚鏵及何鴻燊）的澳門形勢發展，憂慮在政商界舉足輕重的何鴻燊一旦年邁退隱或離世，澳門局勢會生變起亂。
“隱患”提早爆發
但如今一場突如其來的爭產風波，卻讓北京所關注的“隱患”提早爆發。
報導稱，澳門自2002年開放賭權後，美資賭場如金沙和永利等大舉進軍澳門，就連何鴻燊女兒何超瓊及兒子何猷龍經營的美高梅金殿和新濠天地，也有美資和澳洲資金，外資勢力不斷膨脹。
北京擔心，何家爭產風波一旦處理失當，由愛國人士何鴻燊掌控的澳門賭業龍頭澳博，勢必首當其衝，導致澳門賭業勢力重新洗牌。
最壞情況會變成由外資壟斷，影響澳門經濟和民生，甚至破壞政局和諧穩定。
據說，自何鴻燊家族爆發爭產後，北京駐澳聯辦及澳門特區政府密切留意事件，並接觸相關人士瞭解最新情勢。
傳霍震霆介入事件
另有消息指出，身兼全國政協委員的澳博執行董事、可對爭產結果起關鍵作用的霍震霆已介入事件，希望爭產事件最終毋須鬧上法庭。
霍震霆暫未對報導置評，其助手指他已到南非出差。
三太踢走四太惹怒賭王
爭產早埋下炸彈
重視親情和聲譽的賭王何鴻燊，一向秉持“家和萬事興”原則，盡力去平衡各房太太的和諧，何以他今次不惜將家事搬上法院，入稟控告二、三房？
原來爭產事件早在賭王前年意外跌傷後，便已埋下炸彈，令他決意與妻兒對簿公堂。
賭王曾說過，屬意將家產以信託基金形式平分予四房，亦向長房子女承諾會適當分配家產給他們，以示對正室黎婉華的尊重。
香港《東方日報》報導，但自賭王在2009年中意外跌傷後，事情開始產生變化。休養期間，掌控其賭業王國命脈的Lanceford在未事先知會情況下，先後在人事和股權上出現重大變動，加入二房女兒何超瓊和超鳳擔任董事。
當賭王逐漸康復後，他開始積極分配家產，其中去年11月29日率先將信德11.5%股份分給二房子女，令他們成為信德最大股東。緊接在12月，把他擔任大股東的澳門漁人碼頭分給三房陳婉珍及何超雲母女。
這個市值過百億元的項目過往由四太梁安琪及賭王重臣蘇樹輝負責並擔任董事，在三太、何超雲為董 事後，兩人即被踢出董事局，令賭王心生不滿。同月27日，賭王赫然發現自己一直全數持有兩股的Lanceford，竟在他不知情下發行9998股新股，並 分別撥入了二房及三房控制的公司，賭王的股權大幅被攤薄。
賭王心死
決意取回自己的東西
賭王即時傳召相關人士給予機會解釋，但多番未被理會，至本月24日公司宣佈將Lanceford股份只分給二房、三房，賭王亦未被知會。由於之前他一直要求有關人士解釋，甚至打電話詢問不果，至此賭王終於死心，決定部署行動取回屬他的東西。
（澳門29日訊）賭王何鴻燊家族爭產風波越來越迷離，據報，賭王週四晚在二太藍瓊纓大宅 舉行家庭會議，保證會尋求解決方法，且承諾不與二房子女對簿公堂。雖然賭王大派定心丸，但二房的何超儀與三房幼女何超蓮週五卻分別於網上發炮，前者稱“人 在做，天在看！”及“正邪不兩立”；超蓮則透過微博謂有“妖魔鬼怪”。
爭產風波令四房人分成兩派，二房藍瓊纓和三房陳婉珍聯手，對抗長房黎婉華子女及四房梁安琪，不過賭王及四房人各執一詞，說法也朝令夕改。
週四賭王代表律師高國峻入稟高院，控告二房和三房等人，但當天晚上賭王到二太的谷柏道大宅舉行家庭會議時，據知賭王突然轉念，向在場二房子女承諾，不會自己人告自己人。
不知如何解僱律師
據悉，週四晚賭王向二房子女表示，他要解僱律師高國駿，並需簽署有關文件，奈何賭王卻又說不知要怎麼解僱律師。
不過，二房子女也跟父親聲明在先，“如果解決不到，惟有法庭見”。
賭王即再三保證會尋求解決方法。
賭王力求四房家人和諧，但二房和三房週五分別發炮。三房幼女超蓮在凌晨1時34分率先透過微博謂有妖魔鬼怪，“任驚濤駭浪多兇險，妖魔鬼怪多邪惡，媽媽的一句安好便勝過一切。”
何超儀則在“面子書”發表“人在做天在看”、“正邪不兩立”和“何方妖孽，簌簌如律令”言論，並附上LMF樂隊的粗口歌。
（香港29日訊）香港已故支聯會主席司徒華週六安息，約有4千470名市民到場致祭。而在隨後的團體公祭上，行政長官曾蔭權率領6名官員出席，並慰問華叔家人。
司徒華（華叔）的安息禮拜下午3時開始，華叔的靈柩在教堂六長四短鐘聲下，引領進入教堂。
運送華叔靈柩的靈車下午約2時半，抵達尖沙嘴聖安德烈教堂，靈車的車身貼上了“完美句號”的字句，並佈置了華叔生前喜愛百合花。
在下午3時安息禮拜開始時，教堂響起六長四短的鐘聲，象徵“平反六四”。在主禮人的引領下，靈柩被送入教堂。
此前，於早上9時至下午1時在尖沙嘴聖安德烈教堂舉行的公祭，市民自攜鮮花，到場簽弔唁冊及進入教堂默念。支聯會代主席李卓人表示，有4千470名市民到場致祭。
下午1時團體公祭，特首曾蔭權率領6名官員到場表達最後致意。另外，美國及美國領事館代表、民建聯及自由黨的代表亦到場致祭。
不過，與華叔關係親近、人在台灣的王丹和吾爾開希，因未獲香港政府批准入境，無法參加悼念活動。
民運領袖夜祭華叔
雖然王、吾2人被拒入境，但六四事件後被中共通緝的北京工人自治聯合會成員呂京花成功衝破政治防線，週五由美國赴港，參與週五晚的追思會，夜祭救命恩人，週六則出席安息禮拜。
呂京花週五稱，永遠不會忘記華叔與支聯會對她的“救命之恩”，“如果不是華叔與他們（支聯會）的努力，面對中國這樣強大的鎮壓，我們是無法順利的（逃亡）”。司徒華本月初因病逝世，享年79歲。
However, the U.S. actually has much greater inequality than in any of those countries.
Specifically, the "Gini Coefficient" - the figure economists use to measure inequality - is higher in the U.S.
Gini Coefficients are like golf - the lower the score, the better (i.e. the more equality).
According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.
In contrast:
So why are Egyptians rioting, while the Americans are complacent?
Well, Americans - until recently - have been some of the wealthiest people in the world, with most having plenty of comforts (and/or entertainment) and more than enough to eat.
But another reason is that - as Dan Ariely of Duke University and Michael I. Norton of Harvard Business School demonstrate - Americans consistently underestimate the amount of inequality in our nation.
As William Alden wrote last September:
Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study.
Or, as the study's authors put it: "All demographic groups -- even those not usually associated with wealth redistribution such as Republicans and the wealthy -- desired a more equal distribution of wealth than the status quo."
The report ... "Building a Better America -- One Wealth Quintile At A Time" by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School ... shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.
Here's the study:
Video - Carlin doesn't appreciate the global banking elite
It's difficult to hear so turn up the volume...
Runs 10 seconds. Created with Photospeak an app for the iphone.
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Video - George Carlin - Wall Street owns Washington
Truth and profanity warning. Pass it on if you care.
Carlin the truth teller on education, the lack of honesty and accountability from politicians, the sickening power of Wall Street lobbyists, corporate control over Washington, regulatory capture, and political corruption.
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| Source: CreditCards.com |
Video - Carlin doesn't appreciate the global banking elite
It's difficult to hear so turn up the volume...
Runs 10 seconds. Created with Photospeak an app for the iphone.
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Video - George Carlin - Wall Street owns Washington
Truth and profanity warning. Pass it on if you care.
Carlin the truth teller on education, the lack of honesty and accountability from politicians, the sickening power of Wall Street lobbyists, corporate control over Washington, regulatory capture, and political corruption.
The Carlin video collection...
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George Carlin on the Tonight Show in 1966...
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Video - Cenk on Goldman's AIG lies - Jan. 27, 2011
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Further reading...
Video - Nomi Prins on Washington's disconnect
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Foreclosing on america...
During President Obama's State of the Union speech, he took a jab at big oil, but stayed away another big recipient of government breaks, Wall Street. While the bailed out banks hand out billion of dollars in executive bonuses, Americans wallow in joblessness. RT's Ramon Galindo shows us that the foreclosing of America keeps getting worse.
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492 days in October 2010 versus an average of 382 days in October of last year.
"In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months."
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Reprinted with permission.
492: The number of days since the average borrower in foreclosure last made a mortgage payment.
Banks can’t foreclose fast enough to keep up with all the people defaulting on their mortgage loans. That’s a problem, because it could make stiffing the bank even more attractive to struggling borrowers.
In recent months, the number of borrowers entering severe delinquency — meaning they missed their third monthly mortgage payment — has been on the decline, falling to about 700,000 in October, according to mortgage-data provider LPS Applied Analytics. But it’s still more than double the number of foreclosure processes started.
As a result, banks are taking progressively longer to foreclose. The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October, according to LPS. That compares to 382 days a year ago and a low of 244 days in August 2007.
In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months.
That’s a meaningful incentive, and it’s likely to grow unless banks manage to boost their throughput. Speeding up the process won’t be easy, as demonstrated by the banks’ continuing legal troubles related to robo-signers, bank employees who signed foreclosure affidavits without properly checking the required loan documentation.
Millions of Americans still are paying their mortgages even though they owe more than their homes are worth. The more banks’ backlog grows, the more likely they are to join it, adding to the already giant pile of foreclosures weighing on the housing market.
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Watch this short clip...
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How many different signatures can one robo-signer have..?...
Start the slideshow...
You will see several examples of ACTUAL fraudulent documents that were submitted by large, well known banks in court proceedings.
We're talking over the top, ridiculous fraud here - Fake people, fake signers, fake documents, false notaries, and EVEN fake banks...
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Spoiler ALERT -- Do not miss #7:
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The best for last...
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In case you missed this beauty the first time around, we are reposting it in light of yesterday's revelation that Goldman Sachs stole $3 BILLION from taxpayers thru AIG and lied about it repeatedly, even under oath.
90 seconds of Dennis Kucinich kicking Hank Paulson's Ass...
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Video - Wall Street bailout anti-TARP rant from Dennis Kucinich
Further reading...
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See the rest of the photos - 25 pics - all black & white...
See the rest of the photos - 25 pics - all black & white...
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I chose these by hand so they're pretty decent...
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Don't get sucked in by the distraction. Worry about the birth certificate while Wall Street pockets $144 billion in bonuses.
Is Jerome Corsi of WND panicked right now at the thought of his great conspiracy collapsing and his website traffic along with it.
It's formally known as HB1116 and can be tracked here...
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Scroll down for Jon Stewart video on the birther controversy...
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Meanwhile on Wall Street...
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Hawaii Lawmakers Want Obama's Birth Certificate Public for a Price
Reprinted with permission.
HONOLULU – Hawaii's government would charge $100 for a copy of President Barack Obama's birth records under a bill introduced in the state Legislature by five Democrats.
The bill would change a privacy law barring the release of birth records unless the person requesting them has a tangible interest.
The measure hasn't been scheduled for a public hearing, and it can't move forward unless that happens.
But the idea behind it is to end skepticism over Obama's birthplace while raising a little money for a government with a projected budget deficit exceeding $800 million over the next two years.
"If it passes, it will calm the birthers down," said the bill's primary sponsor, Rep. Rida Cabanilla. "All these people are still doubting it because they don't want the birth certificate from Obama. They want it from our state office."
The Obama campaign issued a certification of live birth in 2008, an official document from the state showing the president's Aug. 4, 1961, birth date, his birth city and name, and his parents' names and races.
Hawaii's former health director also has said she verified Obama's original records, and notices were published in two newspapers within days of his birth at a Honolulu hospital.
Gov. Neil Abercrombie, who was a friend of Obama's parents and knew him as a child, said last month he wanted to release more of the state's birth information about Obama. But he ended the effort last week when the state attorney general told him that privacy laws bar disclosure of an individual's birth documentation without the person's consent.
The new legislation to release records may run into similar legal problems because of Hawaii's strong constitutional privacy protections, said Rep. John Mizuno, a co-sponsor of the bill.
"If people really want to confirm Barack Obama is born in Hawaii, that's fine," Mizuno said. "I don't have a problem with looking at innovative ways to bring revenue to the state. The taxpayers deserve a break."
The $100 fee would help offset the extra work by state employees who handle frequent phone calls and e-mails from people who believe Obama was born elsewhere, Cabanilla said.
But the number of birther requests has been declining from the 10 to 20 weekly inquiries received early last year, according to the Department of Health.
"Requests have decreased significantly over the years. Currently we receive anywhere from zero to five per week," said department spokeswoman Janice Okubo.
The Health Department is still reviewing the bill, Okubo said.
House Health Committee Chairman Ryan Yamane didn't immediately return messages seeking comment on whether he would hold a hearing on the bill.
Online:
HB1116, http://capitol.hawaii.gov/
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Local Hawaii coverage...
Lawmakers see fundraising through Obama birther doubts
Some Hawaii lawmakers see a way out of the state budget hole by capitalizing on doubts about President Obama's birth certificate.
Meanwhile, efforts to convince the so-called "birthers" that Obama's Hawaii birth is authentically documented have ended up backfiring in some recent cases.
In his campaign for president, then-Sen. Barack Obama submitted a short-form certification of live birth showing he was born in Hawaii. Doubters referred to as “birthers” questioned where's the original detailed certificate.
It's a matter that the previous state director of health, Dr. Chiyome Fukino, thought she put to rest more than two years ago before President Obama was elected when she said:
"I, as director of health for the state of Hawaii, along with the registrar of vital statistics… have personally seen and verified that the Hawaii State Department of Health has Sen. Obama's original birth certificate on record."
Yet to this day, birthers still want to see for themselves whether Obama is a natural born citizen, a constitutional standard of eligibility for the office. Questions still flood the governors office and the Health Department, and lawmakers say it's time to make some money off of that while, they say, proving his Hawaii birth to each and every inquiry.
“If the people are so concerned about Barack Obama and if he was actually born in Hawaii, born in the United States, let them pay a fee of 100 bucks,” said Rep. John Mizuno, one of the Democratic co-sponsors of the measure. “We can certainly use the money, and we don't need to hear their complaining anymore."
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Jon Stewart took on the birther controversy...
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| The Born Identity | ||||
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Meanwhile on Wall Street...
Last spring Calvary Baptist Church in Paterson, N.J., faced foreclosure after it was unable to pay its $30,000 per month mortgage.
The strain of possible financial ruin and even shutting the church after 125 years, tested the faith of its congregants and the senior minister, Rev. Dr. Albert Rowe.
"[The bank] filed the papers," Rowe said. "There was a date set for us to have a hearing but I did not think that we would lose the church ... I always had faith that, you want to call it a miracle, or something would happen. I always believed that."
Calvary isn't alone in its financial predicament.
According to real estate watchdog CoStar Group, there's been a dramatic rise in church foreclosures: 200 since 2008, up from just hand full a couple of years before.
According to CoStar's senior real-estate strategist: "It runs the gamut as far as sizes and denominations. And the economy seems to have hit all churches equally."
But not everyone is seeing gloom and doom.
"When you do the math it sounds like we had a tsunami of church foreclosures," said Simeon May, CEO of the National Association of Church Business Administration. "But when you think about the fact that there are over 300 thousand churches in the country and 200 of them filed for foreclosure, that's very miniscule number."
May points to the success of megachurches like First Baptist Dallas, which just imploded part of a city block back in October 2010, to make room for a $115 million building project.
Also, on the whole, church donations were down just three percent in 2010, May said.
But May also admits there is great disparity among the haves and have not's among houses of worship. Even if a church is not threatened by foreclosure or bankruptcy, some may still struggle financially.
"About half of the churches that we've talked to have reported some staff layoffs which is just really unheard of in the church world," May said. "And even a larger percentage have frozen or reduced staff benefits."
The key factor for a church's financial health is the unemployment rate. Many people support the church in proportion to their income. Reduced income equals reduced giving. No income means no charitable giving.
"If corporations resume hiring and increase the rate of hiring, then the churches will have parishioners who have more money to tithe which will help them pay their mortgages, so really all goes back to the economy," said Chris Macke, Sr., a real estate strategist for CoStar Group.
Pastor Rowe's saving grace was his entire pension. He and several other church members used their personal funds to prevent the church's financial collapse. Its money he's confident will be repaid once the economy improves.
"I just took it out and I really didn't think it was a big deal," Rowe said. "I haven't gotten any of my money back yet, but I'm sure I will get it back."
And that, he says, is ultimately in the hands of a higher power.
Editor's Note: In light of the Goldman theft detailed yesterday, we are reposting this series as part of our look back at the Goldman AIG taxpayer heist.
Part 2 of our look at mystery man Dan Jester.
Painstaking detail follows. New angles, new details, new actors, while Henry Paulson stays behind the curtain, controlling the destruction of AIG, the pillaging of taxpayers, and the positive outcome for Goldman Sachs.
Part 1 is here...
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The most detailed write-up of what happened with AIG I've come across. This is not without complexity. Two important points which are discussed in great detail below:
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Read this one carefully. There's a lot in here.
Too Big To Fail is revelatory, though not in the way Andrew Ross Sorkin intended. The book offers startling evidence that Hank Paulson and his deputies colluded with Goldman to create a liquidity crisis at AIG, and to manipulate the government funding a backdoor bailout of AIG's CDO counterparties, most notably Goldman. It's not that Sorkin's sources recounted the truth. Quite the opposite. Rather, they told him stories that were so transparently dishonest that the truth emerges by way of negative implication.
To understand what happened, you need to remember that the top guys at Goldman are really, really smart. They are like champion chess players who anticipate the possible moves of their opponent. The guys at Goldman can quickly grasp how pieces of a financial transaction work together, like the pieces on a chessboard, to game out different scenarios. This attribute is not unique to the guys at Goldman; it's an essential quality of every good banker. But it does mean that the guys at Goldman cannot credibly profess to being oblivious.
The other thing that you must remember is that the dagger hanging over AIG and Goldman -- the eventual payout to the CDO counterparties -- was a zero-sum game between the two financial giants. On June 30, 2008, AIG's net worth was $78 billion and its CDO obligations totaled $62 billion. On August 27, 2008 Goldman's net worth was $46 billion and its share of the infamous CDO portfolio was $22 billion. The stakes were huge.
Also, none of the critical elements that led to AIG's demise were obscure. In retrospect they seem quite obvious. Unfortunately, few in the financial media have attempted to understand those critical elements.
Before we get to the liquidity crisis at AIG, we need to go back to that special relationship between Goldman and AIG...
Goldman bought credit protection exclusively from AIG because:
Like its peers, Goldman underwrote billions of dollars of toxic securities known as subprime collateralized debt objections, or CDOs, and simultaneously bought credit protection on those CDOs in the form of credit default swaps. But Goldman was unique in that it only bought protection from AIG Financial Products, or AIGFP, and no one else. Under normal standards of risk management, this approach is imprudent; a bank should diversify its risk exposures whenever it can. Given that AIG was one of Goldman's biggest clients, and that the CDO exposure at AIG was a huge part of Goldman's equity base, it's inconceivable that Hank Paulson, Goldman's CEO until June 2006, would not have been regularly briefed on this matter. The same goes for Goldman's board of directors. It's a very basic and essential part of any bank's risk management and corporate governance.
It's also a basic tenet of risk management to game out the different scenarios under which Goldman might seek recovery under its credit default swaps. Based on that analysis, the choice to deal exclusively AIG, in retrospect, seems very obvious, for four reasons set forth below.
1) AIG Financial Products was not regulated, whereas the monolines were;
This is one of those really basic things that few in the media seems to grasp. The other large companies offering credit protection on the CDOs were the monoline insurance companies, names like MBIA or AMBAC. AIGFP was not regulated, whereas the monolines were. A regulator can order an insurer to withhold any payout that might impair that company's ability to service its other policyholders. That's precisely what the New York State Insurance Department did last April, when it ordered Syncora, the monoline formerly known as XL Capital Assurance, to suspend payments. This state's regulatory authority to interfere with the terms of a contract proved to be a powerful hammer. It incentivized the CDO banks to negotiate haircuts on their claims throughout 2008.
A lot of people compare the settlements with the monolines with those at AIGFP and wonder why the monolines negotiated better deals. But in fact, they are comparing apples and oranges. The only government entity legally authorized to interfere with AIGFP's contracts was a bankruptcy court. But even that authority had been seriously curtailed.
2) AIGFP was willing to post cash collateral, which was outside the grasp of a bankruptcy judge;
Here's another very basic thing. The credit protection sold by the monolines included financial guarantees as well as credit default swaps, whereas AIGFP extended only credit default swaps. A credit default swap is a financial derivative. One of the common, and insidious, attributes of financial derivatives is that a counterparty may need to post margin, or cash collateral, whenever the spot value of its contractual claim turns negative. Here's an overly simple example: Suppose AIG promised to sell Goldman one barrel of oil on January 25, 2011 for $80, and then on June 25, 2010 spot price is $100 (i.e. an implicit $20 loss). AIG would post $20 in collateral with Goldman. If the spot price falls to $65 on July 25, then AIG would get its $20 collateral returned, and also receive $15 in collateral deposited by Goldman.
As a rule the monolines were unwilling to sign any contract that required them to post collateral. They accrue insurance reserves and, again, insurance regulation is predicated on the idea that one policyholder 's recovery not should leapfrog ahead of all the others. But that's precisely the idea behind posting collateral on a derivative. If AIGFP filed for bankruptcy, Goldman would be entitled to immediately liquidate the credit default swap and permanently keep its cash collateral; a bankruptcy judge could not touch it. The recently amended bankruptcy code clarified the special priority given to derivative counterparties over other creditors.
So, as you would expect, It wasn't simply the support of the regulators that gave the monolines the upper hand in negotiating with the CDO counterparties; it was also the fact they they held the cash.
3) AIGFP would have been wiped out by a bankruptcy filing, because it was active in financial trading;
There's another reason why the monolines had the upper hand, whereas AIGFP did not. Bankruptcy was always a viable option for the monolines, whereas it was not for AIGFP. Aside from its book of business providing credit support for CDOs, AIGFP was very active in all sorts of financial trading of all sorts of derivatives. The monolines were not really involved in that business.
The vast bulk of business done by financial traders is hedged, meaning there are always two back-to-back contracts. Another overly simple example: If AIG promised to sell Goldman one barrel of oil on January 25, 2011 for $80, AIG would simultaneously contract with Morgan Stanley to buy one barrel of oil on January 25, 2011 for $78, and lock in the $2 profit. Throughout the next 12 months, any profit from one contract would correspond to the loss on the other. But if AIG filed for bankruptcy on June 25, 2010, Goldman could choose to liquidate its contract and hold on to its collateral, whereas Morgan Stanley might still insist of selling the oil on the later delivery date. The hedge would then become unwound, and suddenly expose AIG to a huge trading loss.
The preferential treatment given to derivatives subverts the entire purpose of a bankruptcy filing, which is to buy time for an orderly restructuring. For AIGFP, the downside risk of a bankruptcy filing was vast and unknown, which was not the case for the monolines.
Because Goldman is very savvy about trading risk, it must have mapped out an endgame enabling it to declare "checkmate" once AIG were backed into a corner.
4) AIG did not understand what it was doing; it relied on the rating agencies.
But if Goldman was so smart, how could AIG be so dumb? There's a short answer and a long answer. The short answer is three little letters: AAA. The long answer gets to the same result; it just takes a longer while to get there.
According to Michael Lewis's reporting in Vanity Fair, the guys at AIGFP were clueless:
Toward the end of 2005, Cassano [the head of AIGFP] promoted Al Frost, then went looking for someone to replace him as the ambassador to Wall Street's subprime-mortgage-bond desks. As a smart quant who understood abstruse securities, Gene Park was a likely candidate. That's when Park decided to examine more closely the loans that A.I.G. F.P. had insured. He suspected Joe Cassano didn't understand what he had done, but even so Park was shocked by the magnitude of the misunderstanding: these piles of consumer loans were now 95 percent U.S. subprime mortgages. Park then conducted a little survey, asking the people around A.I.G. F.P. most directly involved in insuring them how much subprime was in them. He asked Gary Gorton, a Yale professor who had helped build the model Cassano used to price the credit-default swaps. Gorton guessed that the piles were no more than 10 percent subprime. He asked a risk analyst in London, who guessed 20 percent. He asked Al Frost, who had no clue, but then, his job was to sell, not to trade. "None of them knew," says one trader. Which sounds, in retrospect, incredible. But an entire financial system was premised on their not knowing--and paying them for their talent! [Emphasis added.]
It seems less shocking if you understand how these CDOs were put together and sold. Take a few minutes and glance over the prospectus for Davis Square Funding VI, one of the dozens of CDOs structured by Goldman before the risk was laid off on AIG. You could spend all day studying the document, but you will never be able to answer the question, "What am I buying?" The document doesn't tell you. That's the point. It's evident in every aspect of this document and the offering circulars for most of the other CDOs. The business purpose, the essence of the deal, can be summarized in one word: obfuscation.
Goldman argued that these CDOs were put together to meet market demand, but demand for what? These subprime CDOs were not financing anything (the underlying mortgages and mortgage securities had already been financed), nor were they promoting liquidity in the marketplace (they couldn't be traded because nobody knew what was in them).
If you wanted to invest in a diversified pool of subprime mortgages, there was no reason to waste hours and hours studying the impenetrable documentation of a CDO. Instead, you could look into any subprime mortgage deal, like MASTR Asset Backed Securities Trust 2005-NC2. Skim the prospectus for five minutes, and you know that the deal is comprised of 3,380 subprime mortgages, all of which were originated by New Century Financial, 55% of which were in California, 100% of which are interest only, 60% of which closed with second liens, 58% of which relied on "stated documentation," and 83% of which had prepayment penalties. If you don't like MASTR 2005-NC2, you can easily compare it with hundreds of other stellar transactions.
Remember, AIGFP only assumed risk exposure on the "super senior" classes, or tranches, of these CDOs. They only assumed the risk on paper that was rated AAA. Therein lies the faulty assumption that AIG and almost everyone else made before they ever started slogging through the impenetrable documentation. It's rated AAA so you don't need to worry about the details. The offering circular for Davis Square Funding VI is just like the offering circular for Davis Square Funding VII and countless other CDOs. It tells you Moody's Expected Loss Rate on a credit rated AAA. After 20 years, the cumulative loss is 0.02 percent. It doesn't tell you that the deal was structured to make a sham of the due diligence process.
People who bought these CDOs looked at the ratings and almost nothing else. They relied on Goldman and the rating agencies to make sure that everything was OK.
Which again brings us to the issue of posting collateral. As a matter of policy, financial institutions rated AAA or AA almost never agree to post collateral on their derivative trades. (That's one reason why big banks find trading to be so profitable.) The only reason why the guys at AIGFP would have ever agreed to post collateral back in 2005 or 2006 is because they thought there was no way in hell that these CDO tranches rated AAA would never be valued at anything below par.
But Goldman's credit default swaps would not trigger a bankruptcy, because there was no way to figure out their market value.
Goldman started harassing AIGFP to start posting cash collateral as early as August 2007, when the matter went to the "highest levels" at Goldman Sachs.
But Goldman met with limited success, for obvious reasons. The idea that these CDOs could be marked to market is a joke. There never was any real market of buyers and sellers of these things. AIG's auditor, PricewaterhouseCoopers, and the Fed's auditor, Delloite & Touche, determined under fair value accounting rules that there was no way that the CDO obligations could be valued according to any market benchmark.
AIG and Goldman had spirited talks over the amount of posted collateral for over a year, but those talks had remained at an impasse. No one could agree on the CDOs' "market value." So long as AIG was solvent, the inability to quickly ascertain the CDOs' value worked in AIG's favor. Later, when AIG faced a liquidity crisis, the inability to quickly ascertain the CDOs' value worked against AIG.
Various side deals mask the true magnitude of Goldman's participation in AIG's CDO portfolio.
According to the AIG memo on CDO exposures, dated November 27, 2007, obtained by CBS News, Goldman's CDOs represented about a third of the $67 billion total. But that may have been understating Goldman's role in building up the portfolio. About 16 of Societe Generale's trading positions were for CDOs that were arranged by Goldman. Apparently, one way that Goldman would offload CDOs would be to sell them, along with credit protection from AIG, as a package deal. In other words, some of the banks never seriously intended to hold the CDOs in the first place. But Goldman used them as a front for its own syndicating efforts.
Later, around the time Tim Geithner was brought in to settle the CDO matter, Goldman pulled another stunt to make it appear as if its CDO exposure to AIG was smaller than it actually was. The transaction is alluded to in a couple of obfuscatory paragraphs (pages 16 and 17) in Neil Barofsky's SIGTARP report on the AIG bailouts. It appears as if Goldman suddenly sold $8 billion in CDOs to Deutsche Bank, so that it would appear as if Goldman's share of the total would look smaller. But the only way that Deutsche Bank would have bought the stuff is if there were no risk involved.
On September 15, 2008, the rating agencies thought that AIG's CDO portfolio looked just fine.
The Washington Post printed a 2,700-word article about AIG's internal e-mails during 2007, when the guys at AIGFP kept insisting that the CDOs did not present any kind of troublesome risk. But the Post left out a critical element in the narrative. At that time, virtually all of the 148 CDO trades, listed in a November 27, 2007 memo obtained by CBS, were still rated AAA.
In fact, most of these CDOs were first downgraded in May 2008, the same month that AIG was downgraded from Aa2 to Aa3. At the time, the CDO downgrades were fairly insignificant. Of course we don't know why the CDO downgrades occurred when they did, because we don't really know what's inside of them. But consider how bad the damage was by May 2008. Among the subprime bonds that comprised the ABX 2006-1 index, the average foreclosure rate was already 25%.
Was AIG really too big to fail? Maybe if you worked for Goldman.
The party line, expressed in Too Big To Fail and elsewhere, is that an AIG bankruptcy posed a greater systemic risk than a Lehman bankruptcy, because AIG was so much bigger. But that analysis is highly superficial and very misleading. AIG itself was a holding company, which guaranteed the debt of its unregulated financial subsidiary, AIGFP. The lion's share of AIG's revenues and profits, and about 80% of its consolidated assets, were concentrated among its different insurance company subsidiaries. Those insurance companies were solvent. They did not pose any systemic risk. In fact, it's quite likely that they would have continued to operate outside of bankruptcy.
The only subsidiary with major problems was AIGFP, whose financial obligations were guaranteed by the parent. But AIGFP was only about one-third the size of Lehman. It's almost impossible to see how AIGFP ever posed a systemic risk, unless everyone's intention to provide a backdoor bailout to the banks. Put another way, it seems that the only reason that the government needed to step in for AIG was to provide a backdoor bailout to its banks.
Goldman's scheme to create a liquidity crisis at AIG, in order to manipulate the government into paying CDO counterparties 100 cents on the dollar
Because of laws that emasculated regulatory oversight, Goldman's trading positions in credit derivatives with AIG had escaped the scrutiny of the Fed until September 11 or 12, 2008, when AIG told the New York Fed that it would soon run out of cash. The CDOs did not trigger a liquidity crisis at AIG, at least, not directly. Rather, it was the imminent cash drain from anticipated downgrades, from AA- to A-, which would trigger $30 billion in new collateral postings on AIGFP's trading positions. In addition, someone at the company had screwed up. They had invested billions in cash collateral, intended for someone else, in highly rated mortgage securities, for which there was suddenly no liquid market. So AIG needed to come up with the cash right away.
Simultaneously, of course, Lehman Brothers was imploring the government for support, and Paulson's position, at least on September 12, 2008, was that the Federal government would provide no support of any kind to bail out a private company like Lehman or AIG. Private bankers must come up with a private solution on their own.
On September 15, 2008, the same morning that Lehman's bankruptcy sent shockwaves, Geithner had convened a meeting with JPMorgan Chase and Goldman to work on an emergency bridge financing for AIG. Why include Goldman? Traditionally, the bank with the largest credit exposure to distressed borrower helps arrange the debt restructuring. Geithner opened the meeting, and left soon thereafter, leaving Paulson's deputy, Dan Jester, in charge. Jester was a former Goldman banker whom Paulson had plucked in July 2008 to work on matters that concerned Paulson.
September 15, 2008: Paulson's deputy sabotages efforts to negotiate a private bank deal.
Sorkin describes the opening of the Monday morning meeting:"Look, we'd like to see if it's possible to find a private-sector solution," Geithner said addressing the group. "What do we need to do to make this happen?"
For the next ten minutes the meeting turned into a cacophony of competing voices as the banks tossed out their suggestions: Can we get the rating agencies to hold off on the downgrade? Can we get other state regulators of AIG's insurance subsidiaries to allow the firm to use those assets as collateral?
Geithner soon got up to leave, saying, "I'll leave you with Dan," and pointed to Jester, who was Hank Paulson's eyes and ears on the ground. "I want a status report as soon as you come up with a plan."
A critical point here is that Pauslon's deputy, not Geithner, sat at the table to lead government negotiations.
Job 1 was to persuade the rating agencies to forestall their anticipated downgrades, which would have burned up billions because of increased calls to post collateral. This task was assigned to the government's representative, Dan Jester.
"He was as useless as tits on a bull." [AIG CEO] Bill Willumstad, normally a calm man, was in an uncharacteristic rage as he railed about Dan Jester of Treasury, while telling Jamie Gamble[a lawyer at Simpson Thatcher] and Michael Wiseman [a lawyer at Sullivan & Cromwell] about his and Jester's call to Moody's to try to persuade them to hold off on downgrading AIG.
Willlumstad had hoped that Jester, using the authority of the government and his powers of persuasion as a former banker, would have been able to finesse the task easily.
Willumstad explained that the original plan "was that the Fed was going to try to intimidate these guys to buy us some time." Instead, when Jester finally got on the phone, "he didn't want to tell them." Clearly uncomfortable with playing the heavy, Willumstad told them that Jester could only bring himself to say, "We're all here, and, you know, we got a big team of people working and we need an extra day or two."
If Jester spoke to Moody's the way Willumstad said he did, then there is no doubt in my mind that Jester intended to sabotage the deal. No other explanation is plausible. The importance of the phone call was not unlike that of a death row lawyer seeking a last minute stay of execution. Jester had been the Deputy CFO at Goldman. It would have been his job to deal with the rating agencies regularly. There is no way that he would not have known what to say. All he would need to say is that since AIG's last meeting with Moody's, the situation is evolving in a way so Treasury and the Federal Reserve are feeling increasingly confident that the deal being hammered out will significantly ameliorate the company's liquidity issues. Everyone knows that the rating agencies do not like to abruptly pull the trigger when a situation is still evolving. Everyone also knows that the rating agencies are acutely aware of their chicken/egg role they play in determining a firm's liquidity situation. (A company has access to the capital markets because of its rating, but its rating reflects its access to the capital markets.) Also, as Janet Tavakoli once mentioned, at least one investment bank trained its analysts about how to place pressure on the rating agencies. Finally, it would not have been indelicate to allude to the agencies' no-so-clean hands in building up the AAA pyramid scheme known as AIGP's CDO portfolio.
An in case there were any doubt that Jester's refusal to act as an advocate for AIG made the critical the difference, here's how Jimmy Lee, of JPMorgan Chase, tallied the numbers on the morning following the downgrades. "They [AIG] have $50 billion in collateral and they need $80 to $90 billion. I don't know how we can bridge the gap." Because of the ratings downgrades, AIG posted an additional $32 billion by quarter's end. In other words, they would have needed about $32 billion less if the downgrades had not taken place.
Minutes after Jimmy Lee briefed his boss, Jamie Dimon. Geithner, Jester Lee and the people from Goldman sat down to figure out what to do next.
September 16, 2008: Paulson installs a CEO at AIG who will favor Goldman.
And a few minutes after Goldman, JPMorgan Chase and the government tried to figure out what was next, at 9:40 a.m., September 16, Goldman CEO Lloyd Blankfein placed a call to Hank Paulson, which Paulson took, even though such communication was illegal. According to Sorkin's sources, they discussed Lehman and not AIG. Just at the moment when the government was deciding whether to step in and save AIG, Blankfein never mentioned that an AIG collapse could have easily wiped out $15 billion in Goldman's equity and caused everyone to scrutinize the dodgy CDOs underwritten during Paulson's tenure. Do you think they just forgot?
As it happened, a few minutes after Paulson got done speaking with Blankfein, Geithner briefed Paulson about a tentative proposal for the government to extend AIG an $85 billion facility. The conversation with Geithner ended at 10:30 a.m.
Sorkin's sources fabricated a tall tale about what took place afterward:
However resistant Hank Paulson had been to the idea of a bailout, after getting off the phone with Geithner, who had walked him through the latest plan, he could see where the markets were headed and that it scared him. Foreign governments had already been calling Treasury to express their anxiety about AIG's failing.
Jim Wilkinson [Paulson's deputy, formerly of the White House Communications office] asked incredulously," are you really going to rescue an insurance company?"
Paulson just stared at him as if to say only a madman would stand by and do nothing.
Ken Wilson, his special advisor, raised an issue they had yet to consider. "Hank, how the hell can we put $85 billion into this entity without new management?"-- a euphemism for how the government could fund this amount of money without firing the current CEO and installing its own.
Without a new CEO, it would seem as if the government was backing the same inept management that had created this mess."You're right. You've got to find me a CEO. Drop every other thing you are doing," Paulson told him. "Get me a CEO."
Their choice: Ed Liddy, the former CEO of Allstate and Goldman board member.
The "same inept management that had created this mess"? It's impossible to overstate the mendacity embedded in that brief passage from Sorkin's book. If Paulson actually spoke what was on his mind at the time, the words would have been something like this:
"So if we don't bail out AIG, then Goldman takes a $15 billion hit to its equity and faces shareholder lawsuits for actions taken under my watch. And Willumstad, the new AIG CEO who joined management after all these toxic CDOs were booked, will find it very convenient to also point the finger of blame at Goldman. [Willumstad joined AIG's board in April 2006, and became CEO in June 2008.] The AIG bankruptcy trustee might even sue Goldman for making fraudulent claims about the CDOs, the same way that HSH Nordbank sued UBS and M&T Bank sued Deutsche.
"But if we bail out the company, there's still no guarantee that Goldman can recover on the CDOs. And Willumstad can still point the finger at Goldman. So before we agree to anything we've got to get rid of Willumstad ASAP and replace him with someone who will make sure that Goldman's interests are being looked after. Let's use Ed Liddy. He's a Goldman board member, so he will never disclose anything that makes Goldman look bad. If he wants to preserve the value of his Goldman stock, he'll discreetly pay off the CDOs before anyone figures out what's happening. So I decided Willumstad's replacement will be Liddy, beginning tomorrow, and I don't give a damn that my unilateral decision to change CEOs overnight is a complete travesty of corporate governance or government accountability. Our story will be that we are replacing the management that created this mess."
How do I know that this was on Paulson's mind and that these were his motivations? As noted at the beginning, the guys at Goldman are very smart, and they knew that the CDO settlement was a zero-sum game. Remember, AIG was Goldman's biggest client and the issue of collateral postings had been in dispute for over a year. Up until June 2008, Ken Wilson was CEO of Goldman's Financial Institutions Group. There is absolutely no way that Wilson did not know what was going on with AIG's management, and that Goldman, not Willumstad was primarily culpable for building up the CDO portfolio.
Also, I've been a round the block a few times. Whenever faced with a crisis, senior people immediately think about how the situation will reflect on them. And they promptly think about damage control. And like many people who rise to the top, Paulson knows how to avoid leaving fingerprints. He probably learned his lesson decades earlier, working as John Erlichman's assistant. Like those other famous CEOs, Bernie Madoff and Donald Rumsfeld, Paulson never used e-mail at work. The day after he fired Willumstad, Paulson spoke on the phone with Blankfein five times.
Whoever bore the blame for creating the mess at AIG, it's extraordinarily reckless, during the middle of a crisis, to immediately install a CEO with no prior experience at the company, which is a huge sprawling conglomerate. That's especially true when that new CEO has a conflict of interest the size of the Grand Canyon.
Sorkin also makes clear that it was Jester, not Geithner, who took control in structuring AIG;s bailout facility. Before Geithner gets on a conference call with Bernanke:
Jester and [Paulson's assistant Jeremiah] Norton were poring over all the terms. They had just learned that Ed Liddy had tentatively accepted the job of AIG's CEO and was planning to fly to New York from Chicago that night. To draft a rescue deal on such short notice, the government needed help, preferably from someone who already understood AIG and its extraordinary circumstances. Jester knew just the man: Marshall Huebner, the co-head of insolvency and restructuring at David Polk & Wardell who was already working on AIG for JP Morgan and who happened to be just downstairs.
Months later, Paulson's spokesman told The New York Times that, "Federal Reserve officials, not Mr. Paulson, played the lead role in shaping and financing the A.I.G. bailout."
October 7, 2008: Paulson's appointee unnecessarily pays out $18.7 billion to the CDO counterparties in exchange for nothing.
Actions speak louder than words, and AIG's new CEO acted in a way that removed any doubt that he would make decisions in favor of Goldman. Remember, there was no need to hand over anything to the CDO counterparties, because there was no agreed-upon market value for the CDOs, which were all still highly rated. On October 7, 2008, AIG paid out $18.7 in cash in exchange for nothing. Before that October 7, only 26% of the CDOs' face value had been paid out as cash collateral. Immediately afterward, counterparties hold cash for 56% of the CDOs' face value of $62.1 billion. All of a sudden, the banks, not AIG, had the upper hand.
November 6, 2008: Only at the point when AIG is once again running out of cash and running out of time, and the CDO banks now hold the upper hand, Geithner is brought in to settle a matter when the government is backed into a corner. (Checkmate anyone?)
On November 5, 2008 only $24 billion remained available under the government's revolving credit facility, though that cash could have been used up overnight if AIG were downgraded below A-. But, as S&P said, "if mortgage-related losses continue to worsen, then we could lower the ratings into the 'BBB' category."
The CDOs, (which would all be downgraded into the CCC category in a few months), remained a dagger hanging over AIG's liquidity situation. The only way to restore confidence in the company would be to remove that risk.
But the banks now had the upper hand, since they held most of the cash. Time was not on Geithner's side, and protracted negotiations over the CDOs' underlying value could have taken forever. Also, 29% of the remaining CDO exposure belonged to two French banks, whose regulator advised Geithner that it was illegal for them to settle at less than par. Challenging another country's bank regulator would have opened up a whole can of worms at a point when the risk of global financial panic was very real.
Geithner's attempts to drive a harder bargain would have created a crisis in confidence that could have likely triggered a further ratings downgrade. The $27 billion to remove the CDO albatross off of AIG's books was only 15% of the entire $180 billion bailout package.
November 12, 2008: Following public disclosure of the backdoor bailout, Paulson announces his big bait-and-switch: his refusal to use TARP funds to stabilize the mortgage markets.
The collective amnesia of mainstream media notwithstanding, there was full contemporaneous public disclosure of the backdoor bailout of the banks at the time the deal was cut. The bailout package had a lot of moving parts, so it took The Wall Street Journal a day or so before it figured out precisely hat was going on. "New AIG Rescue Is Bank Blessing," printed on page C1, explained that banks "will be compensated for the securities' full, or par, value in exchange for allowing AIG to unwind the credit-default swaps." And for anyone who was slow on the uptake, the Journal printed a picture:
Once the public learned that the CDOs no longer posed a risk to AIG, Paulson announced his his big bait-and-switch: his refusal to use TARP funds to stabilize the mortgage markets. This about face causes the value of all mortgage securities to plummet, imposing an additional loss on Maiden Lane III (and triggering the insolvency of Merrill Lynch).
But Paulson's coup de grace was to use one of his appointees to fabricate a false history of the backdoor bailout. But that's for another piece.
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Read the other parts of this series:
Further reading:
Congress Exposes Potential Profiteering in AIG's Deals: Delay Enabled Further Cover-Up (Janet Tavakoli)
