{"id":124,"date":"2010-02-07T00:37:45","date_gmt":"2010-02-07T04:37:45","guid":{"rendered":"http:\/\/www.silver-investor.com\/blog\/?p=124"},"modified":"2018-06-10T10:58:23","modified_gmt":"2018-06-10T10:58:23","slug":"aig-gatethe-worlds-greatest-insurance-heist","status":"publish","type":"post","link":"https:\/\/www.themorganreport.com\/blog\/aig-gatethe-worlds-greatest-insurance-heist\/","title":{"rendered":"AIG-Gate:The World's Greatest Insurance Heist"},"content":{"rendered":"

AIG-GATE: THE WORLD\u2019S GREATEST INSURANCE HEIST
\nBy Ellen Brown
\nFebruary 5, 2010
\nwww.webofdebt.com\/articles
\nRumor has it<\/a> that Timothy Geithner is on his way out as Treasury Secretary, due to his involvement in the AIG scandal that is now unraveling in hearings before the House Oversight and Reform Committee.\u00a0 Bob Chapman<\/a> writes in The International Forecaster<\/em>:
\nEach day brings more revelations of efforts of the NY Fed and Goldman Sachs to hide the details of the criminal conspiracy of the AIG bailout. . . . This is a real crisis on the scale of Watergate. Corruption at its finest.
\nBut unlike the perpetrators of the Watergate scandal, who wound up looking at jail time, Geithner evidently has a golden parachute waiting at Goldman Sachs, not coincidentally the largest recipient of the AIG bailout.\u00a0 At least that is the rumor sparked by an article by Caroline Baum<\/a> on Bloomberg News<\/em>, titled \u201cGoldman Parachute Awaits Geithner to Ease Fall.\u201d\u00a0 Hank Paulson, Geithner\u2019s predecessor, was CEO of Goldman Sachs before coming to the Treasury.\u00a0 Geithner, who has come up through the ranks of government, could be walking through the revolving door in the other direction.\u00a0\u00a0
\nGeithner has been under the House microscope for the decision of the New York Fed, made while he headed it, to buy out about $30 billion in credit default swaps (over-the-counter derivative insurance contracts) that AIG sold on toxic debt securities. The chief recipients of this payout were Goldman Sachs, Merrill Lynch, Societe Generale and Deutsche Bank. Goldman got $13 billion<\/a>, roughly equivalent to its bonus pool for the first 9 months of 2009.\u00a0 Critics are calling the New York Fed\u2019s decision a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been put through bankruptcy proceedings in the ordinary way. In a Bloomberg<\/em> article provocatively titled \u201cSecret Banking Cabal Emerges from AIG Shadows,\u201d David Reilly<\/a> writes:
\n[T]he New York Fed is a quasi-governmental institution that isn\u2019t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve. This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed\u2019s bailout programs. It\u2019s as though the New York Fed was a black-ops outfit for the nation\u2019s central bank.
\nThe beneficiaries of the New York Fed\u2019s largesse got paid in full although they had agreed to take much less. In a November 2009 article titled \u201cIt\u2019s Time to Fire Tim Geithner,\u201d Dylan Ratigan<\/a> wrote:
\n[L]ast November . . . New York Federal Reserve Governor Tim Geithner decided to deliver 100 cents on the dollar, in secret no less, to pay off the counter parties to the world’s largest (and still un-investigated) insurance fraud — AIG. This full payoff with taxpayer dollars was carried out by Geithner after AIG’s bank customers, such as Goldman Sachs, Deutsche Bank and Societe Generale, had already previously agreed to taking as little as 40 cents on the dollar. Even after the GM autoworkers, bondholders and vendors all received a government-enforced haircut on their contracts, <\/a>he still had the audacity <\/a>to claim the \u201csanctity of contracts\u201d in the dealings with these companies like AIG.
\nGeithner testified<\/a> that the Fed\u2019s hands were tied and that the bank could not \u201cselectively default on contractual obligations without courting collapse.\u201d But if it was all on the up and up, why all the secrecy? The contention that the Fed had no choice is also belied by a recent holding in the Lehman Brothers bankruptcy, in which New York Bankruptcy Judge James Peck set aside the same type of investment contracts that Secretaries Paulson and Geithner repeatedly swore under oath had to be paid in full in the case of AIG. The judge declared that clauses in those contracts subordinating other claims to the holders\u2019 claims were null and void in bankruptcy.
\n\u201cAnd notice,\u201d comments bank analyst Chris Whalen<\/a>, \u201cthat the world has not ended when the holders of [derivative]contracts are treated like everyone else.\u201d He calls the AIG bailout \u201ca hideous political contrivance that ranks with the great acts of political corruption and thievery in the history of the United States.\u201d
\nIf you tell a lie big enough and keep repeating it, said Joseph Goebbels, people will eventually come to believe it. The bailout of Wall Street initiated in September 2008 was premised on the dire prediction that if major counterparties in the massive edifice of derivative contracts were allowed to fall, the whole interlocking house of cards would collapse and take the economy with it. A hijacked Congress dutifully protected the derivatives game with taxpayer money while the real economy proceeded to collapse, the financial sector choosing to put their money into this protected form of speculative betting rather than into the more mundane and risky business of making loans to struggling businesses and homeowners. In the end, $170 billion<\/a> of federal funds went to AIG and the banks feeding at its trough. Meanwhile, a survey of state finances by the Center on Budget and Policy Priorities think tank found that state governments face a collective $168 billion budget shortfall<\/a> for fiscal 2010. If the money used to bail out AIG and the banks had been used to bail out the states instead, the states would not be facing insolvency today. \u00a0
\nThere is no law against gambling, but there is a law against fraud.\u00a0 In Watergate, a special prosecutor was appointed to bring criminal charges; but times seem to have changed.
\nEllen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt<\/span>, her latest book, she turns those skills to an analysis of the Federal Reserve and \u201cthe money trust.\u201d She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include Forbidden Medicine<\/span>, Nature\u2019s Pharmacy<\/span> (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health<\/span> (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com<\/a>, www.ellenbrown.com<\/a>, and www.public-banking.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

AIG-GATE: THE WORLD\u2019S GREATEST INSURANCE HEIST By Ellen Brown February 5, 2010 www.webofdebt.com\/articles Rumor has it that Timothy Geithner is on his way out as Treasury Secretary, due to his involvement in the AIG scandal that is now unraveling in hearings before the House Oversight and Reform Committee.\u00a0 Bob Chapman writes in The International Forecaster:More<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[121,89],"tags":[],"yoast_head":"\nAIG-Gate:The World's Greatest Insurance Heist<\/title>\n<meta name=\"description\" content=\"AIG-Gate:The World's Greatest Insurance Heist\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.themorganreport.com\/blog\/aig-gatethe-worlds-greatest-insurance-heist\/\" 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