Wednesday, June 30, 2010

"NYT Digs Further Into the AIG Backdoor Bailout" -CJR (AIG; GS)

Felix Salmon had a good post this morning, "The inexplicable AIG waiver":
Louise Story and Gretchen Morgenson have another huge AIG/Goldman story today, which centers on one new and interesting piece of information: when AIG paid off its bank creditors in full, with the help of that monster government bailout, it also signed a waiver forfeiting its right to sue those banks, including Goldman.
The waiver is buried on page 385 of the 823 pages of documents that the NYT has, wonderfully, put online in a very easy-to-read form. (It’s also linked to the full 250,000-page document dump from the House Committee on Oversight and Government Reform, if you want to go trawling through the documents yourself.) I was rude about the NYT putting source documents online a couple of weeks ago; this is the best possible way of the NYT proving that I was wrong....
That's Felix, humble and lovable.
Here's the Columbia Journalism Review's The Audit blog (column?):

Regulatory capture doesn’t begin to describe what went on here
Just when you thought the AIG/Goldman Sachs backdoor bailout scandal couldn’t smell any fishier, The New York Times wades through 250,000 pages of a document dump and came out with a story showing in more detail how the government sold out taxpayers in order to secretly bail out giant banks.
Regulatory capture doesn’t really describe what happened here. It’s more like regulatory kidnapping.
The Times shows the Bush administration and the Federal Reserve Board of New York (under Obama’s Treasury Secretary Tim Geithner):
— Forced AIG to give up its right to sue the banks getting the backdoor bailout for any fraud they may have committed against the insurer
— Empowered a fresh-from-Goldman guy named Dan Jester to oversee the AIG bailout while allowing him to retain his (presumably substantial) Goldman shares [Goldman is an Audit funder]
— Rebuffed outside advisers’ plans to give the banks haircuts on what they were “owed,” which could have saved taxpayers $30 billion that instead went to pad Wall Street’s (and foreign banks’) bottom line (half of which gets paid out in bonuses and the like)
— Attempted—and succeeded for a couple of years—to cover all this up
This is business journalism at its best, and it’s no surprise to Audit readers that it’s Louise Story and Gretchen Morgenson who reported it. They’ve been responsible time after time for some of the most important journalism of the crisis.
Here, they quote a law professor, analyzing what this all means... 
MORE, including links that are worth a bookmark, if not an immediate look.