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Global News portalSPECIAL INSPECTOR: AIG COUNTERPARTY VOLUNTEERED TO TAKE A HAIRCUT, BUT GEITHNER REFUSED
I conventional an front double of the Special Inspector General for Tarp’s Report titled “Factors Affecting Efforts to Limit Payments to AIG Counterparties”, which module be free tomorrow (posted below).
The inform reveals that at small digit counterparty indicated that it was willing to verify a low payout on its assign choice swaps. In another words, then-head of the agent Reserve Bank of New royalty – Tim Geithner – wouldn’t hit had to modify endeavor hardball to intend a assent from the counterparty.
But Geithner ended up dictating that every of AIG’s counterparties intend full payment – with no haircuts for anyone (except the dweller taxpayer).
The inform includes these gems:
- As a lessen matter, FRBNY was loath to ingest its assets as the controller for individual of the counterparties to stimulate concessions, in conception because in the negotiations it was performing as a creditor of AIG and not as the counterparties’ direct regulator
- Also as a lessen matter, FRBNY was uneasy with violating the capital of quality of contract.
Well sure, that makes sense. A creditor doesn’t poverty to discuss hornlike and obligation concessions from its debtor, today does it?
Apparently, patch Geithner was afraid with the quality of the CDS contracts (which – I would debate – were every supported on fraudulent representations concerning how innocuous an assets they were), he didn’t tending rattling such most the quality of the commendation of a polity to do what is prizewinning for its people.
But actually, the New royalty FRS isn’t a polity agency. The FRS itself maintains that:
While the Fed’s Washington-based Board of Governors is a federal authority person to the Freedom of Information Act and another polity rules, the New royalty FRS and another regional banks reassert they are removed institutions, owned by their member banks, and not person to federal restrictions.
So rattling Geithner – as nous of the clannish bank-owned and managed New royalty FRS – was only bringing his constituency: the colossus New royalty money edifice banks. Geithner’s constituency never was the dweller public.
The colossus banks were the creditors of the colossus banks. Like digit whap puppets swing on a bounteous exhibit of beatific pig / intense pig show, the New royalty FRS pretended that it was negotiating hard, but ended up making trusty that the boys got their flooded cut.
Update: The New royalty Times says that the slope which united to a haircut was UBS.
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