The Economist: Clarity about AIG

One of he real scandals here, in addition to the sub-prime meltdown was the collapse brought about by involvement in various schemes that brought down many of these financial houses. UBS, Soc Gen, JP. Morgan, Chase, all of these banks were involved in the various corruption scandals that stretch from New Mexico to Florida and often involve CDR financial products and the Democratic party. We need to start looking at the root of the losses, and that is where the true outrage will be found, not the whipped up hysteria over bonuses.

From The Economist:

Shocking though the bonuses have been, they pale in comparison with the $49.5 billion of payments that AIG has made to counterparties in its disastrous foray into credit-default swaps—many of them foreign banks (see chart). This was no accident: it was precisely bailing out these trading partners that the government viewed as necessary to avoid a systemic meltdown. Still, the transfers—including almost $13 billion to Goldman Sachs, making it, as one newspaper put it, a “charity case”—are likely to receive more scrutiny as the bonus storm subsides.

A quick look at the companies being investigated over alleged black box deals, (The Highlighted companies merely reflect who received the biggest payouts from AIG, Chase may not be highlighted but they received money) So we have the whole system collapsing and the federal Government pouring money into AIG to provide financial cover for deals that should never have taken place. At the same time various cities and states have filed an anti-trust case against the very companies the Fed is now trying to save. The same companies that the Federal government is connecting to various corruption scandals across the country.

Companies involved:

AIG Financial Products Corp., AIG Sunamerica Life Assurance Co., Bank of America Corporation, Bank of America NA, Bear Stearns Companies, Inc., Cain Brothers & Company, LLC, CDR Financial Products, Inc., Financial Guaranty Insurance Co., Financial Security Assurance Holdings, Ltd., First Southwest Company, GE Funding Capital Market Services, Inc., Genworth Financial Investment Management, LLC, George K. Baum & Company, Investment Management Advisory Group, Inc., JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., Kinsell Newcomb & De Dios, Inc., Merrill Lynch & Co. Inc., Morgan Keegan & Co., Inc., Morgan Stanley, National Westminster Bank plc, Natixis, S.A., Packerkiss Securities, Inc., Piper Jaffray & Co., Security Capital Assurance, Inc., Shockley Financial Corp., Societe Generale, Sound Capital Management, Inc., Trinity Funding Company, LLC, UBS Ag, UBS Securities LLC, UBS Financial Services Inc., Wachovia Bank, N.A., Wachovia Corporation, Winters & Co. Advisors, LLC, XL Asset Funding Company 1 LLC, XL Capital, Ltd. and XL Life Insurance & Annuity Company

What are they alleged to have done?

The Municipal Bond Scandal that Bloomberg markets exposed in 2006 with their story Broken Promises is emblematic of a culture of corruption that exists in the Democratic party. Using the poor and needy as an excuse, CDR Financial Products along with several other businesses including J.P.Morgan Chase and AIG, teamed up with significant elements of the Democratic party in a nationwide scheme that routinely left parts of this country devastated.

Pay for Play is a misnomer, in reality that is only half the equation. Yes the bribery of Democrat politicians is an offense all by itself. But even more threatening were the black box deals and financial schemes using the municipal bond market as a means to pilfer millions of dollars. The deals were opaque by nature and complicated by design. In short they involve insurance companies, banks, and CDR floating municipal bonds for local government agencies with the purpose of funding improvements, but with the real goal of merely of enriching the companies .

The Convergance continues.

WASHINGTON (CNN) -- Treasury Secretary Timothy Geithner says he didn't know "the full scale" of AIG's retention bonuses until March 10, but it wasn't because anybody was trying to keep the $165 million payments secret.In fact, the company reported the plans in filings made in September, CNN reported on the plans in December and January and Geithner himself answered a question that mentioned the bonuses during a congressional hearing on March 3.

Geithner is a small part of a bigger issue, the media needs to begin addressing this.

WASHINGTON (CNNMoney.com) -- Treasury Secretary Tim Geithner sat alone at the witness table answering questions and getting an earful from a panel of senators.Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, cautioned Geithner that Americans were crazy angry about corporate bailouts.

"I have never -- in the 22 years I've been here, I've never seen such anger, with the sense of betrayal, that people in positions of responsibility took advantage of them," said Conrad. "The outrage of people cannot be dismissed."