How the NY Fed Pimped Out the American Taxpayer (at Par!) and Totally Got Away With It




Damnit, America, you let them assrape you for 100 pennies on the dollar and didn't even get a greasy $20 bill left on the nightstand. Shame, shame. Whenever you people are ready to revolt just let me know, I'll be standing by with my flaming pitchfork.

It sounds like a bad telethon, an AIG CFO calling around to see if "hey, can we get you 40 cents on that CDO instead of 100?" but this is reality. This happened and you had absolutely no idea it was going on. The rats made off with the loot, AIG is still a vegetable and you, silly taxpayer, are still on the hook for the NY Fed's shenanigans.

Like I said, grab the damn pitchforks already you lazy bastards.

Bloomberg
:

In the months leading up to the September 2008 collapse of giant insurer American International Group Inc., Elias Habayeb and his colleagues worked nights and weekends negotiating with banks that had bought $62 billion of credit-default swaps from AIG, according to a person who has worked with Habayeb.

Habayeb, 37, was chief financial officer for the AIG division that oversaw AIG Financial Products, the unit that had sold the swaps to the banks. One of his goals was to persuade the banks to accept discounts of as much as 40 cents on the dollar, according to people familiar with the matter.

Among AIG’s bank counterparties were New York-based Goldman Sachs Group Inc. and Merrill Lynch & Co., Paris-based Societe Generale SA and Frankfurt-based Deutsche Bank AG.

By Sept. 16, 2008, AIG, once the world’s largest insurer, was running out of cash, and the U.S. government stepped in with a rescue plan. The Federal Reserve Bank of New York, the regional Fed office with special responsibility for Wall Street, opened an $85 billion credit line for New York-based AIG. That bought it 77.9 percent of AIG and effective control of the insurer.

The government’s commitment to AIG through credit facilities and investments would eventually add up to $182.3 billion.

Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department and Chairman Ben S. Bernanke’s Federal Reserve. Geithner’s team circulated a draft term sheet outlining how the New York Fed wanted to deal with the swaps -- insurance-like contracts that backed soured collateralized-debt obligations.


See, I don't even need to know the rest of the story to know that this is the part where it goes horribly, horribly awry. I know Tim Geithner well enough to know that his intention was not to leave the taxpayer in a position of safety, nor was it to save the global financial system. His intention was, as it always has been, to confuse, obfuscate, distract, and rob. Pure and simple. He obviously learned well from his days at the helm of the NY Fed (if that isn't the premiere training ground for future economic dictators, I'm not sure what is).

Part of a sentence in the document was crossed out. It contained a blank space that was intended to show the amount of the haircut the banks would take, according to people who saw the term sheet. After less than a week of private negotiations with the banks, the New York Fed instructed AIG to pay them par, or 100 cents on the dollar. The content of its deliberations has never been made public.

Nor will it ever be unless someone storms the Fed and demands it. I don't care how many wrinkled old FRNs Dallas Fed has in the vault, nor do I care about how Richmond Fed depreciates its PP&E, I want to know who NY Fed pimped us out to, for how much, when, and whose signature authorized the transaction. That's it. THAT is the part that is not audited every year and why I laugh at the very idea of a Fed audit - as if you think NY Fed is sloppy enough to leave bloody gloves lying around in the damn vault with the gold. Who do you think we are dealing with here? Just because Geithner acts like an idiot doesn't mean the prick isn't groomed to assrape the last penny you've got if that's what his keepers dictate he is to do. Come on, America, keep the fuck up or get the fuck out. If Citigroup can pass an audit every year and actually has to stick to GAAP, what in the hell makes you delusional enough to believe you will find anything on the Fed balance sheet that you didn't already know was there? Bwhahahahahahaha LMFAO!

So you tell me why NY Fed paid for this garbage at par. If you need help finding an answer, bend over in front of a mirror and ask yourself why your ass is so red and raw.

You're welcome.

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.