AIG stiffs small US banks and pays 100% to Foreign Banks?

[dkf]

U.S. Banks Stiffed By AIG Kept Secret
By Brian Beutler - March 26, 2009, 6:30PM

As I reported earlier, at today's House Financial Services hearing, Spencer Bachus (R-AL), the committee's ranking member, made an interesting allegation. He suggested that, though AIG had spent billions of dollars in bailout money to make its major counterparties whole, some smaller institutions (including U.S. banks) had been asked to accept 20 or 30 cents on the dollar for secured loans they'd made to AIG subsidiaries.

This obviously raises several questions. For instance: Which institutions got stiffed? Why were they asked to take a hit when bigger institutions never were? What was the nature of the loans they made? Unfortunately, these turn out to be difficult questions to answer.

What we do know is this: Before today's hearing, Bachus sent letters both to Barney Frank and to Timothy Geithner about this very issue. I've gotten a hold of the former letter, but haven't yet been able to get my hands on the latter.

You can read the whole letter to Frank here, but the key paragraph reads:

I have been informed that, in contrast with its treatment of foreign banks, AIG is now attempting to force many of its creditors that are U.S. banks to accept severe reductions in the debt owed to them. I am told in some cases that these U.S. banks are being asked to accept reductions of over 70% of the debt owed to them.

http://tpmdc.talkingpointsmemo.com/2009/03/us-banks-stiffed-by-aig-kept-secret.php?ref=fp7

[Truth2Tell]

1. At some point I hope Obama will get a clue

about this shit. Really. This has to stop.

Recommended so people can think about it.

[dkf]

2. This is pretty new I think.

But it just gets worse and worse.

[Truth2Tell]

6. yep,

just read over at Greenwald (http://www.salon.com/opinion/greenwald/) that B of A and Citi are using TARP funds, not for the intended purpose of extending more credit, but to buy MORE toxic assets - because they can turn around and sell them to the Treasury for a 2X+ profit. They are deliberately adding more garbage to their balance sheets with our money, so they can sell it to us at ripoff prices for yet MORE of our money.

None of this is new. This is what we get by putting the foxes in the hen house. Going along with these Wall Street criminals could well be the biggest mistake of Obama's Presidency.

[dkf]

7. OMG. Disgusting. ARRRRGH.

[EFerrari]

3. Isn't this the opposite of what needs to happen for us to get on our feet again?

[MonteLukast]

4. I think AIG is way beyond business sense.

I don't think even their self-interest as businesses is at play anymore.

I think they purely WANT to ditch American banks/workers in favor of foreign banks/workers. I think they're trying to wash their hands of America altogether.

The sad part is, it's only about half a dozen at the top who want this. But that's all that's required.

[dkf]

5. Maybe the London Derivatives Branch is giving all the US taxpayers money

to Europeans. They aren't Americans after all.