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Kohn takes a beating
Thursday, March 05, 2009
The fellas at the Wall Street Journal Real Time Economics blog watched Federal Reserve Vice Chairman Donald Kohn testify before the Senate Banking Committee today so I didn't have to.
Apparently there was only one question: "Where's all the AIG money going?" The answer wasn't forthcoming as described in their report:
Now, I did happen to catch that hearing...“My judgment would be that giving the names would undermine the stability of the company,” Kohn said in a contentious Senate hearing.
...
It didn’t go over well.
“Public confidence in what we’re doing is at stake, it’s their money that is being poured into these institutions,” Senate Banking Chairman Christopher Dodd, D-Conn., told Kohn. “That kind of an answer undermines that very significantly.”
...
Kohn’s rejection of the idea contrasts how Bernanke has handled the AIG counterparty question in the past.
According to a transcript of a Nov. 18, 2008, House Financial Services Committee hearing, Rep. Carolyn Maloney, D-N.Y., asked Bernanke, “will you make public who those [AIG] counterparties are and how much they received?”
The Fed chairman was quite agreeable in a "the check's in the mail" sort of way.
Bernanke replied, “I think that information can be made available,” though he noted that AIG had many counterparties. Bernanke added, “we will see what we have.”Those Freedom of Information Act lawsuits by Bloomberg and Fox News should be just about ready to get underway...
In a letter Wednesday to Bernanke, Maloney said she’s still waiting. “To date, your office has not provided that information to me nor, as far as I am aware, to the Financial Services Committee,” Maloney wrote.
Asked about that same issue in a Senate hearing two days ago, Bernanke said AIG counterparties made “legal, legitimate, financial transactions” and normally “would have presumption to privacy about their commercial decisions.”
“So that is a consideration we have to take into account,” Bernanke said, adding “we understand your concern and we want to make sure that we provide all the information that’s needed to make the public policy judgments.”
That’s still a far cry from “no.”
Kohn appeared to finally deliver that Thursday, to much abuse.
5 comments:
"Bernanke said AIG counterparties made “legal, legitimate, financial transactions” "
If AIGs transactions - selling insurance against credit default - were "legal and legitimate" then they must ensure they keep money on hand to pay out insurance claims.
But AIG doesn't have money to pay out their insurance claims. In fact, taxpayers have been paying out AIGs claims to the tune of over $100,000,000,000. So those transactions were neither legal nor legitimate!
If I sold you auto insurance, you got in a wreck, filed a claim with me, and I said "oops, I don't have enough money to pay your claim" I would be put in jail for fraud. My selling you insurance was NEITHER LEGAL or LEGITIMAGE.
Bernake is a pathetic fool to think that the people of this country are dumb enough to believe the idiotic claim that AIGs transactions are legal and legitimate.
Bernanke shows his true colors with that statement, that he is protecting that banks and bankers and could care less about people in this country.
What is Bernanke trying to cover-up? Who is he trying to protect? Why? Why lie to the people of this country and tell them AIG made "legal, legitimate, financial transactions"?
Could there possibly be any connection to JP Morgan and Goldman here? Could these two have collected tens of billions of dollars in AIG money? Wouldn't surprise me a bit. That's what the Fed is there for after all.
The first post hit’s the nail on the head.
The AIG press flacks will counter that they did not expect to have many insurance claims because RE was such a sound investment. But that just begs the question that if there was so little danger from default then why did they need insurance to begin with. If the chance of claims is so small that no money is needed to be put aside then that means that there is no need for the insurance. However CDS was nothing to do with real insuracne it was just a way to collect fees and bonuses and a way for other corporations to pretend that their investments were protected so they could issue all sorts of debt without due diligence.
CDS were a scam on both sides, and the taxpayers are being told they must pay out on the scam.
And they wonder why the investing public has lost faith in our leaders and Wall Street ? They can go F themselves
I don't understand why the taxpayers don't have Board seats on these companies. I mean for God's sake, we own 80% of AIG - you'd think that would be enough for some representation on the Board. Then the taxpayer representatives could flush out what they're actually doing with our money - rather than having our politicians try to stroke them the right way to get this information. We should have at least a few Board seats at each of the banks that took TARP money for that matter. This is insanity!
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