Bankruptcy

More on Backdoor Big Bank Bailout

By mcbride

As previously noted in linked articles, the way in which the government bailed out AIG indirectly saved the big banks and institutions such as Goldman Sachs from massive losses.  More details of this back door bailout are now emerging: ?Unknown outside of a few Wall Street legal departments, the A.I.G. waiver was released last month by the House Committee on Oversight and Government Reform amid 250,000 pages of largely undisclosed documents. The documents, reviewed by The New York Times, provide the most comprehensive public record of how the Federal Reserve Bank of New York and the Treasury Department orchestrated one of the biggest corporate bailouts in history.

The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts. That decision, say critics of the A.I.G. bailout, has cost taxpayers billions of extra dollars in payments to the banks. It also contrasts with the hard line the White House took in 2008 when it forced Chrysler?s lenders to take losses when the government bailed out the auto giant.?

Here is a link to the full article: http://finance.yahoo.com/news/In-US-Bailout-of-AIG-nytimes-1371128023.html?x=0&sec=topStories&pos=3&asset=&ccode=

Michael

Full post as published by Texas Lawyer Blog on June 30, 2010 (boomark / email).