A 25 Billion Dollar Secret: The NY Fed, Goldman & The AIG Cover-Up

26/10/2011 12:03

October 25, 2011

 

 

Source: Daily Bail

Why did the Federal Reserve Bank of New York (FRBNY), whose Chairman was Stephen Friedman (a Goldman Sachs board member who resigned from the New York Fed earlier this year when it was revealed that he had made $5 million by purchasing shares in GS with the knowledge that AIG would be paying counterparties at par and that Goldman would be getting a $13 billion windfall -- when no one else had this information) and whose President was none other than current Treasury Secretary Tim Geithner, why did this New York Fed choose to pay AIG's counterparties 100 cents on the dollar when AIG itself had been negotiating for steep haircuts with claimants, AND why did they then pressure AIG executives to keep quiet about the decision even discouraging AIG from disclosing the 'par-payments' to its shareholders in required SEC filings?

We'll leave the decision itself (which was fraudulent, borderline criminal, and the reasoning given - a complete joke), for another post and focus on the cover-up.  Certainly it riled up Congressman Darrell Issa who fired off an angry letter last Friday to AIG management and the New York Fed, demanding the following from both:

  1. Emails, phone logs and meeting notes of the following people: Timothy Geithner, Stephen Friedman, Tom Baxter, and Sarah Dahlgren; 
  2. Term sheets, including drafts, relating to AIG’s payments to its CDS counterparties;
  3. Emails, phone logs and meeting notes referring or relating to public disclosure of AIG’s payments to its CDS counterparties including disclosure to the SEC.

Issa continues in his letter:

It is also disturbing that, at the time this secret deal was made, FRBNY Chairman Stephen Friedman, a member of the board of Goldman Sachs, purchased more than 50,000 shares of Goldman Sachs before knowledge of the FRBNY’s bailout of Goldman Sachs and other AIG counterparties became public knowledge.  According to news reports, this transaction has earned Mr. Friedman over $5 million in profit.

Finally, according to one AIG executive quoted in news reports, the FRBNY may have attempted to manage public disclosure of its decision to pay AIG’s counterparties at par by pressuring the company not to file pertinent documents with the U.S. Securities and Exchange Commission (“SEC”):

They’d tell us that they don’t think that this or that should be disclosed.  They’d say, “Don’t you think your counterparties will be concerned?”  It was much more about protecting the Fed.

These allegations raise serious questions about the transparency, accountability and wisdom of the FRBNY’s actions. The American people have a right to know the full details behind the FRBNY’s decision to stop negotiations with AIG’s counterparties and pay them billions of dollars of taxpayer money.

**********

DB here.  It's not difficult to understand what happened, and it most certainly was not a coincidental result of independent decisions made during the heat of the crisis.  We've actually known it was the Fed for awhile.  Ever since House testimony from AIG CEO Ed Liddy confirming that "The Fed made us do it."  The problem at the time was that we didn't know which Fed.

Read Full Article Here...

 

Please note : The content on this site does not always express the viewpoints of the site owner

Many topics are covered and links given, so that you can do your own research

 

FAIR USE NOTICE: These pages/video may contain copyrighted (© ) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available to advance understanding of ecological, Political, Human Rights, economic, scientific, Moral, Ethical, and Social Justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior general interest in receiving similar information for research and educational purposes.

globalnoncompliance.net