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Econwatch
March 18, 2009 2:51 PM

Former NY Gov. Spitzer On AIG Mess

By
David Hancock
Topics
AIG
(AP)
Former New York. Gov. Eliot Spitzer says the real scandal about AIG is not the bonuses, but the "astronomical" payments in full to counterparties that AIG does business with: Goldman Sachs, Bank of America, JP Morgan Chase and others.

Spitzer said that much of the $183 billion that taxpayers have given to AIG has gone in "conduit" back to Goldman Sachs, Bank of America, and JP Morgan Chase and others.

"It was given to AIG, and AIG then shipped it on through to other firms,'' he said. "That is the issue Congress should be probing. The bonuses yes, they matter, but they are penny ante compared to this money. Why, if they knew that that money was going to go back to Goldman, BofA and Morgan Chase, did they need it? What were they getting the money for and what was the premise that made them pay that money up front?"

Spitzer, who made a name for himself by prosecuting Wall Street titans as New York's Attorney General, spoke Wednesday morning on the Brian Lehrer radio show on WNYC. He also wrote an article about "The Real AIG Scandal posted Tuesday at Slate.

He elaborates on this point in his Slate article, saying "We know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already."

"It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure."

Spitzer had an eye on AIG during his tenure as New York State's Attorney General. He sued AIG and gained a $1.4 billion settlement in 2006. WNYC's Lehrer asked if at that time the AG's office investigated credit default swaps and outsized risk that has brought AIG to the brink of failure.

"We were not looking at that part of the company … but what we saw was a company, when you peeled back the first layer of the onion, that was without anything close to adequate controls and adequate structure to know what was going. The way they put their financials together was something that was absolutely beyond what was acceptable, which was why they paid a fine of $1.4 billion."



Spitzer Interview with WNYC's Brian Lehrer

"The Real AIG Scandal": Article Spitzer wrote Tuesday for Slate

Add a Comment
by Igei March 25, 2009 11:25 AM EDT
OK, so the government messed up and AIG employees got some big bonuses. Its over people! Come on do the math, its $160 Million, we've given them $200 Billion! Spending two-weeks discussing bonus money is not going to fix AIG or this economy. Please, lets get past this bonus crap and move on to more important things... like saving America!
Reply to this comment
by brianbwb-2009 March 19, 2009 2:25 AM EDT
Since our money was paid to these firms, then by the rules of capitalism, by the tenets of the altar at which the capitalists worship, we now own a sizeable poart of those firms.

Eminent domain time.
Reply to this comment
by Miltonell March 18, 2009 11:55 PM EDT
WE THE PEOPLE AS A NATION BOYCOTT AIG
It is absolutely insane for one company to have such a position in our National Economy, there needs to be a dismantling of this company and others similar to it. As quoted from an AIG expert ?We are the ones who stand to lose the most now? (speaking of the fact that the government owns 80% of the company) ...... the more we put in, the more we stand to lose (lets cut our losses at 170B). We need to stop now, furthermore we should have never put in the 170B. I think the taxpayer (We the people) should have had more of a voice in the first place of putting in of the 170B, not to mention the fact that 170B is not going to reestablish the company but it is being used to pay bonuses. AIG CAN NOT BE TRUSTED!!!!!!

Furthermore, I think that this whole financial thing is nothing more than a time bomb scheduled by our former anti-American President G. W. B. to keep the focus and media off all of his illegal activities. I use the phrase ?Anti-American President? simply because we have never had such a President to cause our Nation so much turmoil, he disfigured us as a Nation in the eyes of the world.

WE THE PEOPLE AS A NATION BOYCOTT AIG
Reply to this comment
by polisigh March 18, 2009 7:59 PM EDT
Spitzer's investigations of AIG were on target. The WSJ editorial board wrote an irrational opinion blaming Spitzer for the AIG/financial industry quagmire. The WSJ is a shill for the worst examples of American capitalism. Spitzer was called "The Sherrif of Wall Street". They needed an executioner, not just a sherrif.
Reply to this comment
by Chris_I March 18, 2009 6:12 PM EDT
Agreeing with czechtraveler. Yes!
Reply to this comment
by whitemale08 March 18, 2009 4:31 PM EDT
That's why Spitzer was smeared with scandels of hookers Bill Clinton with tales of BJs in the White House so Wall Street/City of London could grease the skids for worthless derivatives and credit-default swaps.

Then Wall Street/City of London would psic out loud barking junkyard dogs like Druggie Limbaugh and Sean Hannity to preach 'tax free' looting by paying these clowns multi-hundred millions in radio contracts.

Druggie Limbaugh hates us regular Americans and loves only the rich so-called 'elite'!
Reply to this comment
by czechtraveler March 18, 2009 4:24 PM EDT
Yes Eliot Spitzer cheated on his wife with a prostitute and he has paid a big penalty for that indiscretion but he did a great job as New York Attorney General and the U.S. could use his help again........
Reply to this comment
by sjc_1 March 18, 2009 3:53 PM EDT
It was given to AIG, and AIG then shipped it on through to other firms,''

This is true and the taxpayers get NOTHING in return for it! Unlike TARP, which was designed to buy the assets, these CDS bets are being paid just to cover the loses on the CDO bundles of Mortgage Backed Securities (MBS)!
Reply to this comment
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