AIG: Can We Get Some Transparency Here?

You know that somethings rotten in Denmark when the editorial pages of the Wall Street Journal and the New York Times agree on something. That cats laying down with dogs event occurred today and it was prompted by the latest bailout of AIG.

Both newspapers opined that it was past high time for the government to come clean as to who we were actually bailing out. You see, the government keeps saying that AIG is systemically important and dollars keep flowing out of the company to make good on various credit default swaps contracts that the company entered into but no one will say to whom this money is flowing.

The Fed and the Treasury are stonewalling and, of course, conspiracy stories are starting to swirl. One holds that Goldman has been one of the chief beneficiaries of the bailout. Goldman naturally denies that and says that although they bought a lot of protection, they were able to hedge their exposure. Another and probably more on the mark theory is that the money is flowing to European banks who were big AIG customers.

If it is the European banks then that one is going to be embarrassing to say the least. The taxpayer is pretty fed up with supporting U.S. banks. If they get wind of a scheme to use their dollars to prop up European banks look out. I wouldn’t want to try and explain the intricacies of international finance and inter-dependency to them.

Regardless of to whom the money has been directed, I suspect that the pressure to open up about it is going to get pretty intense. Clearly there’s something here the government doesn’t want to have to deal with otherwise they wouldn’t be so tight lipped. The problem is that you can never keep a lid on this sort of thing. Look for the leaks soon.

more: here and here 

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