Geithner's Backdoor Bailout for AIG

Thursday, 04 Feb 2010 04:43 PM

By James Hirsen

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Hollywood is buzzing about Conrad Murray. He’s the live-in doctor who was with Michael Jackson when he died.

Murray reportedly will surrender to the police in L.A. on criminal charges related to Jackson’s death. The charges are likely to be involuntary manslaughter over Murray injecting Jackson with the operating room drug propofol and an anti-anxiety drug, lorazepam.

While the news covers what could be a new high profile criminal case and trial, behind the scenes, a tale that ought to be a script for a new movie is unfolding. And this story is one that has a profound effect on each and every citizen of the nation.

Bloomberg is reporting that the idea of secret banking groups that control the country and global economy are not such a crazy idea because of what came out of this week’s congressional hearing into the bailout of American International Group Inc., better known as AIG.

The hearing described a secretive group “deploying billions of dollars to favored banks.”

The legislators are looking at the Federal Reserve Bank of New York, the most influential part of the federal-reserve system, due to its decision in November 2008 to buy out, for about $30 billion, insurance contracts, called credit default swaps that AIG sold covering toxic debt securities.

The bailout benefited a host of financial institutions including, of course, the ubiquitous Goldman Sachs. It is what could be the title of a film, a backdoor bailout.

The banks received 100 cents on the dollar for insurance contracts that would have been a sold for a deep discount but for the massive taxpayer bailout of AIG.

Evidence is emerging to suggest that the New York Fed tried to cover up details of the transaction and the back-door bailout’s beneficiaries.

New York Fed staff and outside lawyers from a law firm edited AIG communications to investors and intervened with the Securities and Exchange Commission in order to keep details about the buyout transactions secret, according to a report by Congressman Darrel Issa.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” Issa said.

When it became clear that the information would be disclosed, New York Fed legal staffer James Bergin sent an e-mail to colleagues, “I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals — too many counterparties, too many lawyers and advisers, too many people from AIG — to keep a determined Congress from the information.”

In other words, this member of the staff of the New York Fed, a quasi-public entity, is complaining in an e-mail about the difficulty in keeping secrets from public.

And who was running the New York Fed at the time of this backdoor bailout?

Answer: Current Treasury Secretary Timothy Geithner, appointed by President Obama, who claims that the New York Fed had no choice but buy those insurance contracts, to keep AIG from going belly up, otherwise we would face an economic apocalypse.

Now what kind of economics could be worse than what we now have? An administration whose leader boasts about a proposed “spending freeze” while projecting $1.5 trillion dollar deficits as far as we can project into the future.

A trillion. One trillion seconds is thirty two thousand years. One trillion dollars placed end to end would reach to the sun and back. This is nothing less than economic slavery for our children and grandchildren.

And the numbers do not include the wars in Iraq and Afghanistan because they are “off budget.”

Congress snuck through the increase of an additional $1.9 trillion in the debt limit quickly before that new Republican senator from Massachusetts, Scott Brown was seated.

So our new debt limit is now an astronomical $14.3 trillion, or $25,000 in debt for every person in the nation.

Massive debt, criminally negligent spending, daunting deficits and revelations of a cover up and possible criminal conspiracy involving people who hold the highest money-related positions in the nation.

The story of the New York Fed, Goldman Sachs and the backdoor bailout ought to be a major feature film. Are you listening Oliver Stone?

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