Cuomo Investigating AIG CDSs And Counterparty Payments

Via TPM:

The Wall Street Journal reports (sub. req.) that [NY State AG Andrew] Cuomo plans to subpoena AIG for documents about the credit default swaps that brought the company to its knees.

See also NYTimes ("Members of Congress and the New York State attorney general demanded detailed information Thursday on how tens of billions of taxpayer dollars flowed through the American International Group during its crisis last fall and ended up in the coffers of several dozen big banks, shielding them from losses.") CNBC's Jim Cramer is expected to blast Cuomo for this, via NYTimes:

Speaking for me only

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    An investigation can completely (5.00 / 2) (#1)
    by Militarytracy on Fri Mar 27, 2009 at 08:12:03 AM EST
    shut down the mortgage market huh?  Because I thought mortgages were about providing human beings with shelter, not just thinking happy Prozac thoughts.

    Perish the thought... (5.00 / 1) (#2)
    by kdog on Fri Mar 27, 2009 at 08:32:29 AM EST
    but I'm starting to dig Cuomo...he's probably only doing it to score populist points for a future run at something, but at least somebody is in authority is looking into the shadyness.

    I don't care about motive any more... (5.00 / 7) (#5)
    by lambert on Fri Mar 27, 2009 at 08:56:35 AM EST
    .... and that's assuming motive is knowable; the human heart is hard to look into.

    In 2008-2009, we've had the largest transfer of wealth in American history, and all without so much as a Congressional hearing (since TARP, which is only part of it, was rushed through NOW NOW NOW).

    If Cuomo's bringing some accountability and transparency to this process, then have at it, say I.


    "Transfer of wealth".... (5.00 / 1) (#7)
    by kdog on Fri Mar 27, 2009 at 09:06:05 AM EST
    that's putting it kindly, I'd call it the largest confidence scam in human history.  Common thievery.

    Me too (5.00 / 4) (#10)
    by Militarytracy on Fri Mar 27, 2009 at 09:44:53 AM EST
    And if fighting for accountability and transparency brings spoils to those who bring it and defend it........well shouldn't it?

    It doesn't matter why (5.00 / 1) (#12)
    by cal1942 on Fri Mar 27, 2009 at 10:18:18 AM EST
    and for that matter reacting to public fury certainly ain't a bad thing, that's a good thing.

    Give that man an RG Dun.


    Jim Cramer is an idiot. Why does anyone listen (5.00 / 2) (#3)
    by Angel on Fri Mar 27, 2009 at 08:32:55 AM EST
    to him?  He's become nothing more than a gasbag joker.

    indeed (5.00 / 2) (#4)
    by Capt Howdy on Fri Mar 27, 2009 at 08:47:31 AM EST
    a shorter leash is needed.
    a couple of days ago I was reading that the glitterati were shocked SHOCKED that a high percentage of young people looked to John Stewart for news.
    probably no one asked them if they were shocked that anyone turns to that clown.

    No Idiot, Just A Comedian.. (none / 0) (#15)
    by santarita on Fri Mar 27, 2009 at 10:55:11 AM EST
    The proper way to watch Cramer is to assume that that he's making WAGs and then sit back and watch the antics.  

    Following in the footsteps ... (5.00 / 1) (#6)
    by Demi Moaned on Fri Mar 27, 2009 at 08:59:31 AM EST
    of the venerable Spitzer. Where the Federal Government seems bought and paid for us it's good to see some real initiative at the state level.

    Will this stop Cuomo in his tracks? (5.00 / 1) (#8)
    by trillian on Fri Mar 27, 2009 at 09:06:13 AM EST
    Obama Backs Banks, Seeks to Block Fair-Lending Probe

    The administration late yesterday urged the U.S. Supreme Court to bar New York and other states from enforcing their fair-lending and other consumer-protection laws against federally chartered banks including JPMorgan Chase & Co. and Wells Fargo & Co.

    The legal brief, which adopts the Bush administration's position, is a setback for consumer and civil-rights groups that had urged President Barack Obama's team to switch positions. The filing puts the administration at odds with New York Attorney General Andrew Cuomo over the respective roles of state and federal regulators. The high court will hear arguments April 28.

    Wow... (5.00 / 6) (#9)
    by kdog on Fri Mar 27, 2009 at 09:16:46 AM EST
    looks like the lines are drawn, and Mr. Change is with the status quo.

    I guess the speech that made him famous was a line of bull, there are at least 2 Americas...not a red and a blue, but a connected and an unconnected.  A "in on the racket" America and a "suffer the racket" America.


    Yup (5.00 / 1) (#13)
    by cal1942 on Fri Mar 27, 2009 at 10:25:16 AM EST
    Mr. Change is with the status quo.

    And anyone should be surprised at that.  He was Mr. Establishment all the way.  If he hadn't been the press would have eaten him alive beginning on the day he announced and he wouldn't have raised a cryin' dime.


    Maybe there's more to it than what you post in (none / 0) (#11)
    by BobTinKY on Fri Mar 27, 2009 at 10:13:24 AM EST
    your excerpt, but a federal charter seems a thin reed upon which to base a pre-emption or federal immunity argument.  

    Thank Goodness Some In Congress... (5.00 / 2) (#17)
    by santarita on Fri Mar 27, 2009 at 11:14:34 AM EST
    finally decided to investigate AIG's decisions to make  payments to the various counterparties.  My suspicion is that they will find that the squeakiest wheels got the grease and that payments were made to avoid a precipitous disorderly unwinding as opposed to a slower more orderly unwinding.  

    To the extent that TARP recipients got the benefit of AIG's payments, those could be considered a backdoor subsidy if they weren't owed the money or if they got more than they should have earlier than they should have.  Rep. Spencer Bachus made a quite serious allegation in yesterday's hearing that some counterparties were getting 100 cents on the dollar while others were getting 30 cents.  

    Congress needs to get serious and stop the grandstanding.  We seem to be repeating the political and regulatory missteps in the early years of the S&L and banking crisis of the '80's.  

    I still don't get the outrage (none / 0) (#19)
    by gyrfalcon on Fri Mar 27, 2009 at 01:42:57 PM EST
    but I must be missing something.  The money was given to AIG, I thought, so it could pay its debts and stay afloat.  The debts causing the looming disaster weren't stationery suppliers and caterers, they were obviously, I would have thought, their various counterparties.

    would it be because (5.00 / 1) (#20)
    by DFLer on Fri Mar 27, 2009 at 04:31:31 PM EST
    A.I.G.'s trading partners got 100 cents on the dollar for their money-losing trades when ordinary Americans paying for the bailout have suffered big losses in their 401(k) accounts and other investments.

    Some have also been dismayed to learn that taxpayer money had ended up bailing out foreign banks. Some of the biggest beneficiaries of the bailout of A.I.G. were banks in Europe, including Société Générale of France and Deutsche Bank of Germany, each of which received nearly $12 billion, Barclays of Britain, which received $8.5 billion, and UBS of Switzerland, which received $5 billion.

    Goldman-Sachs (5.00 / 2) (#18)
    by Amiss on Fri Mar 27, 2009 at 11:25:31 AM EST
    That is all I am gonna say.

    Does NY AG have any (none / 0) (#14)
    by oculus on Fri Mar 27, 2009 at 10:34:11 AM EST
    Jurisdiction over AIG expenditure of fed. Funds to AIG?

    Presumably... (5.00 / 2) (#16)
    by santarita on Fri Mar 27, 2009 at 11:00:12 AM EST
    the state claim to jurisdiction would be based on some theory of fraud, corruption or unfair business practice defined under Ny State law.