Wednesday, June 30, 2010


NYT--When the U.S. government began rescuing American International Group from collapse in the fall of 2008 with what has become a $182 billion lifeline, A.I.G. was required to forfeit its right to sue several banks — including Goldman Sachs, Société Générale, Deutsche Bank and Merrill Lynch — over any irregularities with most of the mortgage securities it insured in the precrisis years.

But after the Securities and Exchange Commission’s civil fraud suit filed in April against Goldman for possibly misrepresenting a mortgage deal to investors, A.I.G. executives and shareholders are asking whether A.I.G. may have been misled by Goldman into insuring mortgage deals that the bank and others may have known were flawed.

WB7: Whatever would make them think that? You can be sure that htis goes much deeper than mere stupidity. Paying 100 cents on the dollar and stong arming blanket releases smells more like a public/private conspiracy.

Lets for arguments sake assume that the threat of claims by AIG poses a valid systemic risk. Why is it necessary to sign blanket releases for the benefit of Goldman and the foreign banks when the US government is assuming control of AIG anyway?

You can bet your last enchilada the US government has little or no interest in seeing claims related to the AIG back door bailout and related subprime pump and dump.

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