Wednesday, October 8, 2014

Geithner's testimony today (10/8) in AIG case

bobbyraymurcer2  12 minutes ago Flag

Highlights from Geithner's testimony today (10/8) in AIG case

Mr. Boies also entered into evidence Wednesday a draft essay for the Atlantic that Mr. Geithner had sent to a colleague on March 7, 2012. In the essay, he wrote:
“We force losses on shareholders proportionate to the mistakes of the firm. And we made it clear in the [case of mortgage-giants Fannie Mae and Freddie Mac] and AIG that they would be dismembered, not allowed to live on as independent entities with the scope and reach they had before the crisis.”
Mr. Boies then focused on this issue, “proportionate,” and asked Mr. Geithner if the shareholders for banks like Citigroup Inc. and Morgan Stanley had to face similar “proportionate” losses. Mr. Geithner said they had.
As he did on Tuesday, Mr. Boies peppered Mr. Geithner with questions about the book in an apparent attempt to show that government officials were willing to operate outside the manual’s parameters in some cases, but not when it came to AIG.
On Tuesday, Mr. Geithner played down its importance. “I don’t think it would be fair to say I consulted it extensively during that period,” he said.
Mr. Boies is pulling together material from an array of sources seeking to prove Starr’s contention that government officials viewed the treatment of shareholders as punitive, even as they considered it imperative for the then-giant financial-services company to accept the terms because an AIG bankruptcy would cause widespread harm to the economy.
Still, Mr. Boies drew confirmations of past statements of Mr. Geithner about potential damage from an AIG bankruptcy filing, including that a failure of AIG would have had catastrophic consequences for the broader economy.
Mr. Boies also focused on a past statement by Mr. Geithner that the AIG rescue “wiped out” the company’s shareholders. Mr. Geithner said he had been unartful, noting that shareholders got “a very substantial benefit.”

MY THOUGHTS:

“We force losses on shareholders proportionate to the mistakes of the firm. And we made it clear in the [case of mortgage-giants Fannie Mae and Freddie Mac] and AIG that they would be dismembered, not allowed to live on as independent entities with the scope and reach they had before the crisis.”

He is right about that. in 2012 he decided to say that. After AIG was back to shareholders and Fannie was profitable, He also was right about not being independent. Thanks to the govt robbing them.
He was also right about the scope, before 2008 fannie & freddie were 40% of the mortgage market. In 2014 F&F are 90% of the market with a bigger reach than they ever had. But yet still being robbed by US govt.

Mr. Boies then focused on this issue, “proportionate,” and asked Mr. Geithner if the shareholders for banks like Citigroup Inc. and Morgan Stanley had to face similar “proportionate” losses. Mr. Geithner said they had.

Really? 80% warrants? 

What is our govt going to do to get private capital into the market when in a moments notice they will wipe out the insurers and anyone they feel like. Including the bond holder. 10% haircut. 
No one will show up!! This is evident in the begging by the US govt for participation in mortgages that is not appearing. PLS was 50% of the market in 2008. In 2014 it is 1% or less.

NO ONE WANTS TO DEAL WITH A GOVERNMENT THAT IS A TAKER AND PUNISHES THE CORPS that SAVED AMERICAN TBTF BANKING. FANNIE MAE, FREDDIE MAC AND AIG. 

1 comment:

  1. with all due respect, the bush bailouts may have indeed saved american banking.
    there were no corps propping up those banks when the economy was taking a crap at the end of bush's presidency.

    ReplyDelete

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