BernieHund: The Political Watchdog

Something is starting to smell like a rotten AIG, and it is AIG. First there was the $85 Billion that the federal government infused into the “too big to fail” insurance company, the one that became too big by selling what amounted to imaginary insurance default swaps. Most Americans were and continue to be outraged that our government would bail out a company that made its CEO and top execs multimillionaires, maybe billionaires, by selling pieces of paper that aren’t worth the paper they are written on.

Apparently, Henry Paulson and Ben Bernanke were feeling so rich with the full force of the mint at their disposal that rather than flinch upon hearing that AIG footed the bill for execs to enjoy a $400,000 holiday the week following the receipt of the $85 Billion from the taxpayers that the Dynamic Duo of Paulson and Bernanke headed over to the AIG offices and dumped another $38 Billion on the table.

Okay, so the taxpayers were dragged into the mess kicking and screaming, but the two top money dogs convinced Congress that they kind of knew what they were doing. Apparently, Congress bought into the BS more than America did, filling the Paulson/Bernanke ATM machine with $700 Billion over and above the billions the two financial philanthropists had passed out to save their old friends.

Well, there is no end to the needs of AIG. As the nation is still basking the light of hope, having elected a new President, the P&B team went about their work… out of sight, out of mind. Now, we learn that AIG is still knocking on the door of Fort Knox, like beggars who have found a patron.

The plan was to allow AIG to spin off many of its businesses over two years with “the least possible disruption to the overall economy.”

Well, in case anyone hasn’t noticed “the least possible disruption to the overall economy” isn’t working. I am only reminded of “The Rhyme of the Ancient Mariner.” “Water, water everywhere and not a drop to drink” except in this case it is money, money everywhere and not a dollar to help the taxpayers who are losing their homes to foreclosures, are unemployed (a quarter million lost their jobs just last month), and can barely feed their families. But, what the hell! The least disruption to the overall economy refers only to the bonuses of the greedy thieves on Wall Street.

Ah, but there is a strange new twist although not unexpected.

The Wall Street Journal, citing sources familiar with the matter, reported Sunday evening that AIG’s board was close to approving significant changes to the terms of the $123 billion in loans extended so far, and might announce a revised $150 billion deal as early as Monday.

Details were still in flux, but under the plan being discussed Sunday night, the government would cut the interest rate AIG is paying and use its authority under last month’s $700 billion bailout law to buy $40 billion in preferred shares, the Journal said.

The government would also stand behind billions of dollars in credit default swap agreements - essentially insurance contracts that AIG had sold to customers worldwide, according to the Journal. Finally, it would backstop AIG’s business of securities lending.

The new deal would mark a stunning turn in what has become one of the most controversial Bush administration moves to stem the escalating financial crisis.

In other words, the “too big to fail” insurance company is now dictating the terms of the contract. And, you and I are going to foot the bill. First AIG was “too big to fail.” Now, they have Paulson and Bernanke by the Treasury Jewels.

But in recent days, speculation grew that a new rescue was in the works as concerns mounted that AIG would have trouble unwinding its business units. The global financial crunch may have reduced the value of AIG’s units, as well as others’ ability to buy them — complicating the efforts to spin off assets, experts say.

“The real issue driving the problems is that they can’t sell this stuff,” said Stewart Johnson, portfolio manager at Philo Smith, an investment bank specializing in insurance.

It seems that the truth is finally out. In other words, the sh*t is hitting the fan. Everyone has realized that the “stuff” they “can’t sell” is worth $0.00, nothing, nada, zilch. Did Paulson, Bernanke, and the AIG execs really think anyone was going to line up to buy tickets on the Titanic this year?

An AIG spokesman said Sunday afternoon that the firm is carrying out its plan to “sell assets and repay the Fed loan with interest, and we continue to evaluate other potential options for improving our financial condition.”

If bullsh*t were poetry, the unnamed spokesman would be poet laureate. Unfortunately…

Well, it will be interesting to see the report on AIG’s financials that is scheduled to come out Monday morning at 6:00 a.m. Guess we will have to be up early to see those negatives.

“It’s just a huge spiral,” Johnson said. “The insurance business every day is worth less than the day before.”

No joke! It doesn’t take a mental giant to figure that one out. Maybe it takes a common sense business person on Main Street. You know, one of us dummies!

Well, as the Freeloading Free Marketers continue to criticize universal healthcare as socialism, I suppose that the government bailing out a bunch of thieves should be called something else? But, what? Aiding and abetting? If there is a full investigation into the Wall Street shenanigans, and I doubt there ever will be, but if there was a full investigation I feel sure that criminal charges should be brought. Does RICO ring any bells with the those on Wall Street? I can guarantee that if you or I had perpetrated such a sham, we would be asking for a lawyer from the inside of Crossbar Hotel, not the Plaza.

But, it seems that life and perhaps another scheme has been hatched among the shareholders of AIG.

In recent weeks, shareholders have stepped up their efforts, appealing to both regulators and to government-installed chief executive, Edward Liddy, to revise the AIG’s deal with the government.

Shareholders have asked that AIG receive funds from the $700 billion bailout of the financial sector, which is primarily for banks but open to other financial institutions. Also, Greenberg wants AIG to have access to the Fed’s “discount window,” which provides funding to banks at 1.25%.

Novel idea. Perhaps, we as the taxpayers who are footing this bill should step up our efforts to get our houses that are facing foreclosure bailed out. Maybe we should all go over to the Treasury Department and stand with our hats in our hands and demand that we get a better deal or at least a jar of vaseline that doesn’t have sand in it.