Journalism in the Public Interest


This Week in Scandals: AIG Anger, Madoff Moves and More

Fed Chairman Ben Bernanke blasted AIG this week (Toby Melville/Reuters file photo).Every week, we take stock of how the week unfolded for the stories we’re tracking in Scandal Watch (see the right sidebar). Here is how we do it.  And, as always, feel free to suggest new scandals.

1. Market Crisis

AIG may be singlehandedly saving hundreds of lawyers from unemployment: In the past week, it sued the IRS over a disputed $306 million in taxes, got sued by former CEO Hank Greenberg and hammered out a new deal with the U.S. that reaped it another $30 billion in aid.

AIG also may have sapped the last of the U.S.’s good will in the process: Federal Reserve Chairman Ben Bernanke lashed out at the company’s irresponsibility on Tuesday. A Senate panel then demanded yesterday that the Fed name AIG’s trading partners benefiting from its bailout.

Freddie Mac’s CEO – appointed by the government just six months ago – resigned amid heavy losses at the company, and Rep. Darrell Issa (R-CA) released documents he says prove Fannie Mae’s former CEO Franklin Raines was a “Friend of Angelo.” Raines denied being a part of Countrywide’s VIP mortgage program at a December congressional hearing, and his lawyer denied it again in response to Issa.

Meanwhile, a handful of former Countrywide execs now “stand to make millions from the home mortgage mess” with a new company that buys dirt cheap loans from failed banks taken over by the government, reports the New York Times.

And the Wall Street Journal reported that Merrill Lynch’s top ten earners raked in a total of $209 million in cash and stock last year even though the firm lost billions. Merrill’s bonus payouts are being scrutinized by New York Attorney General Andrew Cuomo, who has subpoenaed several of those top execs. Finally, Portfolio finds several bailed-out banks still doling out perks to ex-employees.

2. Madoff’s Long Con

If possible, Bernard Madoff made himself even less popular this week when his lawyers asked a judge to let his wife hang on to their apartment and $62 million in assets. But Madoff did relinquish ownership of his business, which means his victims may see a check in the mail this month. Meanwhile the U.K. is “considering the possibility of money-laundering charges” for Madoff and Vanity Fair rounded up gossip about the family behind Fairfield Greenwich Group, a Madoff feeder fund whose “due diligence” has been ridiculed.

3. Detainee Treatment

The Obama Justice Department released nine Bush-era legal opinions on its “war on terror” on Monday, spurring calls for a “broad inquiry into interrogation, detention, surveillance and other practices” during the Bush administration. But the administration also repudiated many of those “highly questionable” counterterrorism stances in its waning days, ProPublica reported. (We’ve compiled an interactive list of the legal memos that are still being kept secret.)

Once again our folks in the Senate are a day late and a dollar short They give up $30Bn, AGAIN, and then it hits them that they should know which trading parthers MIGHT benefit from the BAIL OUT. Atta go boys. What a bunch of smucks.

Yes… I have to concur.  Where is this story?  Just a few days ago Nouriel Roubini wrote -

“the government is hiding which are the counterparty benefactors of the AIG bailout (maybe Bloomberg should sue the Fed and Treasury again to have them disclose this information). But some things are known: Lloyd Blankfein was the only CEO of a Wall Street firm who was present at the NY Fed meeting when the AIG bailout was discussed. So let us not kid each other: the $162 bailout of AIG is a non-transparent, opaque and shady bailout of the AIG counterparties: Goldman Sachs, Merrill Lynch and other domestic and foreign financial institutions.”

Why don’t we have more information on these counter-parties?  Where is this story?

With reguard to this article, sec. 1 “Market Crisis” 2para. ‘Senate panel’...
while reviewing the TV broadcasted ‘Dodd Chaired committee’....what really bugs me about such a Q & A event, is that these legislators avoided an important follow up line of questioning, ‘of Regulatory oversite’ and the witness said something about how he was somewhat knowledgeable of the neglect/AIG’s: ‘FP’ & saw the determinations made in 2004 & ‘05 & that his ‘concern’ about CDS (at least the naked are nothing but fraudulent attempts to insure), was scoffed/unfounded at that time in economic history by ‘higher governmental authorities’.  He even put it at the feet of SOME of those higher agencies: CFMA & CFTC.  And not one hint of a question from the committee members attributing this ‘economic fiasco’ UP THE CHAIN to “I’m not an economist” then President G.W. Bush.  I continue to believe Bush was & is leadership part of the funny money trap.  Dodd summarized the Q&A with his silly concern of paying out 100% on the private CDS frauds, from the blank check DODD/FRANKS wrote…now he is showboating ‘demanding’a pretty girl discount!  And Dodd continues to LEAD ALL THE WAY, bringing forth with B. Franks…long time ago: the ‘Paulson/Bernanke/Bush/Cox $700b swindle’.  That & this government of vipers…have no conscience.


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