Thursday, February 11, 2010

FRBNY Negotiations?

"Internal documents provided to Congress shed further light on how the Federal Reserve Bank of New York [FRBNY] approached its unsuccessful and now controversial negotiations with large US and European banks for concessions in the bailout of [AIG]. ... James Bergin, the [FRBNY] lawyer, also wrote that 'we've given up on concessions' and banks would be compensated for full value of assets they insured with AIG in exchange for cancelling contracts written on them. ... [FRBNY] officials felt that their power existed to keep institutions safe, not to get a better deal for the government, and requiring firms to take losses would have eroded certainty in a broad array of insurance contracts, further damaging AIG when it was already being propped up by the government", my emphasis, Serena Ng & Michael Crittenden (N&C) at the WSJ, 25 January 2010, link:

"'There were too many people involved in the deals ... to keep a determined Congress from the information,' a New York Fed in-house lawyer James Bergin wrote to a colleague on March 6, 2009. ... Mr. [Henry] Paulson in prepared testimony said he believes that he, Mr. Geithner and Fed Chairman Beb Bernanke 'acted properly and in the best interests of our country.' He said he was 'confident' that the congressional review would show 'they sought to make appropriate decisions.' ... Staffers within the [FRBNY] have been taken aback by the recent assault on their decisions. 'We did everything we could for the right reasons. We were living in our offices, sleeping on the floow and trying to get through this financial crisis,' said Thomas Baxter, the [FRBNY's] general counsel, in an interview this week. ... Another downgrade would force AIG to pay out billions more to the counterparties and could give banks the right to terminate contracts and keep the collateral--moves that would likely send the insurer spiraling toward bankruptcy. On Nov. 5., the [FRBNY] received a presentation, a 44-page analysis put together by a unit of BlackRock Inc., saying that the banks had significant bargaining power with AIG and had little incentive to cancel the contracts unless they received par, or 100 cents, on the dollar", my emphasis, N&C at the WSJ, 27 January 2010, link:

Quoted without comment.

BlackRock again? What nonsense. Would Vampire Squid (VS) have preferred all of its AIG dealings to have been exposed in bankruptcy court's public forum? VS had no leverage to do anything. I'm sure everything he did was "appropriate" from the VS's perspective.


Anonymous said...

Can you spell "capture"?

The NY Fed was doing what it always does... favoring and protecting Goldman and the other primary dealers in it's exclusive club... it's Monetary Intermediation Club"...

Vampire Squid owns the Federal Reserve... and the Treasury... and just about all members of the Congress...

The AIG bailout was just a smoky, murky way to bailout Government Sachs.

Let's see here...

*Stephen Friedman - GS check
*Henry Paulson - GS check
*Ed Liddy - GS check
*Dan Jester - GS check
*William Dudley - GS check
*Neil Kashkari - GS check
*Pricewaterhouse - GS check
*Davis Polk - GS check

Blackrock? Oh I'm sure they have no reason to favor Goldman... Larry Fink believes in a higher purpose for Blackrock... a fiduciary purpose...

Oh... and lest we forget Lord Blankfein... he's doing "God's work"... sure enough...

Anonymous said...