At its core, Wall Street is a criminal enterprise where the scam-generating engine drives the shameless in their singular purpose: the amoral pursuit of profit. Honed during the bubble years, the scam engine now hums in the twilight of ponzi finance, generating new scams and devouring the public wealth with sociopathic indifference.
This week, 20 of the worlds biggest banks thumped their chest loudly, proclaiming their profitability for the past two months. It’s no surprise that the “unexpected” profits of the big banks during the first two months of 2009 are the result of gifting and graft, but this level of hypocrisy is criminal.
You can bank on further write-downs already being in the pipeline, and the upcoming quarter would see devastating damage had the bank not received $12 billion on the sly. See Didier, that nonchalance is actually stealthily funded by the US taxpayer, whose toil serves only to enrich CRIMINALS. This criminality even renders the blogosphere slack-jaw speechless.
Trust me, you don’t want to get too close. The overview goes like this: in a move reminiscent of Ambac and MBIA, AIG sold insurance against credit defaults, which it could not hope to cover in the event of default, to the 20 big banks, SocGen, JPMorgan, Bank of America, and Citigroup among them. When the inevitible defaults began rolling in, AIG should have begun folding up, paying the banks either pennies on the dollar, which they owe to the insurance purchaser, or nothing at all when that’s what AIG had left .
A person familiar with the New York state probe compared the winding down of AIG’s contracts with those of a company such as Lehman Brothers Holdings Inc., where a firm in distress doesn’t pay out 100 cents on the dollar. Lehman declared bankruptcy in September. On the other hand, AIG’s payouts appear to have been 100 cents on the dollar, the person said. Cuomo is also looking into the negotiations that led to the winding down of the contracts, the person said.
The person said there’s a possibility that AIG is becoming a portal through which the federal government is pouring money to capitalize banks in the U.S. and overseas.
Instead, AIG coughed up blood when Goldman Sachs refused to accept anything less than full value.
As we said that is exactly like beating blood from a stone, but when you’re as plugged in as Goldman Sachs, the stone may as well be hooked up to a blood mobile. Goldman and the banks got their billions; you got stiffed.
In simple terms think of it as an auto dealer, which knows that U.S. taxpayers will provide for an infinite amount of money to fund its ongoing sales of horrendous vehicles (think Pontiac Azteks): the company decides to sell all the cars currently in contract, to lessors at far below the amortized market value, thereby generating huge profits for these lessors, as these turn around and sell the cars at a major profit, funded exclusively by U.S. taxpayers (readers should feel free to provide more gripping allegories).
What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner’s (and thus the administration’s) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.
For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this “one time profit”, which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers’ money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.
There it is, the same ole MO again: “… using AIG as an intermediary.” i.e. a conduit, so the pipe works build, even as Andrew Cuomo expands his investigation.
New York Attorney General Andrew Cuomo, building on his investigation of American International Group Inc.’s bonuses, subpoenaed data on credit derivatives to determine whether Goldman Sachs Group Inc., Deutsche Bank AG and other banks improperly received taxpayer funds.
It is a virtual certainty that the banks improperly received taxpayer funds, which is why Cuomo is expanding his investigation into the wrong places. He cannot be taken seriously until he attempts to determine who is “using AIG as an intermediary”.
Just in case you’re incline to think that the wording “whether Goldman Sachs Group Inc., Deutsche Bank AG and other banks improperly received taxpayer funds.” vs “who is “using AIG as an intermediary” is merely word play, keep in mind we have seen this type of cover-up by omission from Cuomo before.
One could expect his investigation to reveal exactly what we already know: that Goldman and the other big banks improperly received taxpayer funds. Cuomo will probably put a few hapless underlings in jail and then pop a champagne cork. Joe Sixpack will be glad to see someone get punished, though he won’t know who the person was.
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