AIG Executives Won’t Face Criminal Charges

Federal prosecutors will not bring criminal charges against current and former American International Group Inc. executives for their role surrounding financial contracts that nearly brought down the insurer about two years ago, according to people familiar with the matter.

The decision brings to a close a criminal investigation that, while mostly under wraps, was widely followed. The September 2008 bailout of AIG was one of the biggest and most shocking of the financial crisis, as trading by a noninsurance unit brought down one of the most iconic financial companies world-wide.

The probe focused on Joseph Cassano, who headed a London-based unit of AIG called Financial Products, people familiar with the matter have said. Other executives at the unit, Andrew Forster and Tom Athan, also were targets of the investigation, these people said.

“The system worked,” said lawyers F. Joseph Warin and Jim Walden of Gibson, Dunn & Crutcher LLP, who represent Mr. Cassano, in a statement on Friday. “The large group of federal agents and prosecutors was diligent and professional throughout the investigation, and our client is grateful that they did their jobs by following the facts to the end.”

Full Story: AIG Executives Won’t Face Criminal Charges – WSJ.com.

AIG-GATE: The World’s Greatest Insurance Heist – Ellen Brown

Each day brings more revelations of efforts of the NY Fed and Goldman Sachs to hide the details of the criminal conspiracy of the AIG bailout. . . . This is a real crisis on the scale of Watergate

Rumor has it that Timothy Geithner is on his way out as Treasury Secretary, due to his involvement in the AIG scandal that is now unraveling in hearings before the House Oversight and Reform Committee. Bob Chapman writes in The International Forecaster:

Each day brings more revelations of efforts of the NY Fed and Goldman Sachs to hide the details of the criminal conspiracy of the AIG bailout. . . . This is a real crisis on the scale of Watergate. Corruption at its finest.

But unlike the perpetrators of the Watergate scandal, who wound up looking at jail time, Geithner evidently has a golden parachute waiting at Goldman Sachs, not coincidentally the largest recipient of the AIG bailout. At least that is the rumor sparked by an article by Caroline Baum on Bloomberg News, titled “Goldman Parachute Awaits Geithner to Ease Fall.” Hank Paulson, Geithner’s predecessor, was CEO of Goldman Sachs before coming to the Treasury. Geithner, who has come up through the ranks of government, could be walking through the revolving door in the other direction.

Full Story Web of Debt – AIG-GATE: THE WORLD’S GREATEST INSURANCE HEIST.

AIG breakup nets Wall Street $1 billion bonanza: report

OPS:  Bye bye AIG.

AIG breakup nets Wall Street $1 billion bonanza: report – | | Reuters

NEW YORK (Reuters) – Wall Street banks and lawyers could collect nearly $1 billion in fees from the Federal Reserve Bank of New York and American International Group Inc to help manage and break apart the insurer, The Wall Street Journal said on Wednesday, citing its own analysis.

Morgan Stanley could collect as much as $250 million, the newspaper said, citing banking experts and documents released by the New York Fed.

Bank of America Corp, private equity firm Blackstone Group LP, law firm Davis Polk & Wardwell LLP, accounting firm Ernst & Young, Goldman Sachs Group Inc and JPMorgan Chase & Co are among others that have or could get big paydays for helping dismantle AIG, the newspaper said.

To calculate dollar amounts, the newspaper said it tallied estimated fees for transactions already announced and those AIG is considering, planning or may be forced to pursue. It said it obtained assistance from Freeman & Co, Thomson Reuters and documents provided by the New York Fed.

via AIG breakup nets Wall Street $1 billion bonanza: report | U.S. | Reuters.

Cuomo Widens His A.I.G. Investigation

OPS:  “Why is the AG of New York Doing the Investigating Geithner and Holder Should be Doing of the Wall Street Crooks? …. The question is whether the contracts are being wound down properly and efficiently or whether they have become a vehicle for funneling billions in taxpayers dollars to capitalize banks all over the world.”  The Obama Administration Would Want to Know, Don’t You Think?”

Cuomo Widens His A.I.G. Investigation

Attorney General Andrew M. Cuomo of New York said Thursday afternoon that he was widening his investigation of the American International Group to examine whether its trading counterparties improperly received billions of dollars in government money from the troubled insurer.

Those counterparties include Goldman Sachs, which received $12.9 billion, as well as Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion.

“Our investigation into corporate bonuses has led us to an investigation of the credit default swap contracts at A.I.G.,” Mr. Cuomo said in a statement. “CDS contracts were at the heart of A.I.G.’s meltdown. The question is whether the contracts are being wound down properly and efficiently or whether they have become a vehicle for funneling billions in taxpayers dollars to capitalize banks all over the world.”

Other counterparties that received money from A.I.G. include Barclays of Britain ($8.5 billion), Merrill Lynch ($6.8 billion), Bank of America ($5.2 billion), UBS of Switzerland ($5 billion), Citigroup ($2.3 billion) and Wachovia ($1.5 billion).

via Cuomo Widens His A.I.G. Investigation – DealBook Blog – NYTimes.com.

Connecticut, 19 other states launch AIG investigations

Connecticut, 19 other states launch AIG investigations

Twenty state attorneys general announced investigations Friday into the $165 million bonuses paid by insurance giant AIG last week, with Connecticut’s top lawyer issuing subpoenas to CEO Edward Liddy and 11 other executives.

Connecticut Attorney General Richard Blumenthal and the Democratic chairman of the General Assembly’s Banks Committee want Liddy and other executives to appear Thursday and bring with them “original or copies of documents regarding the AIG Financial Products Corp. retention bonus plan and any related contracts or agreements.”

“Now living off supersized taxpayer-paid bonuses, these AIG employees have a moral and legal obligation to appear at this legislative hearing and disclose details about corporate compensation to employees as well as investment decisions by AIG Financial Products Corp. involving credit derivatives and dealings that have led to market destruction,” said Blumenthal, a Democrat.

…snip…

The attorneys general of Arizona, Delaware, Illinois, Kentucky, Louisiana, Maine, Michigan, Mississippi, Montana, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, Pennsylvania, Texas, Washington and West Virginia have also launched investigations. New Jersey Attorney General Anne Milgram said all 19 state attorneys signed a letter to Liddy demanding names and documents concerning the bonuses.

“We are investigating whether this compensation was paid to those working in the AIG subsidiary largely responsible for the financial crisis at the company,” Milgram said.

via Connecticut, 19 other states launch AIG investigations – CNN.com.

Spitzer on AIG: I told you so

Spitzer on AIG: I told you so

Eliot Spitzer has a few words to say about the AIG bonus brouhaha: I told you so.

The former New York governor battered American International Group with charges of corruption long before his own dizzying downfall in a prostitution scandal. He has used this latest financial scandal to strike his old populist, Sheriff of Wall Street themes and, just maybe, mend his reputation — though critics contend that he bears a share of the blame for the insurance giant’s historic near-collapse.

Spitzer says the AIG bonus issue is “penny ante” compared to the billions of the insurer’s bailout money funneled to bad banks, and that Treasury Secretary Timothy Geithner owes America an explanation, quickly.

As for all those politicians piling on AIG this week? Been there. Done that

via Spitzer on AIG: I told you so — Newsday.com.

AIG Turns Over List Of Bonus Recipients

OPS:  Again, these are not Bonuses – They are BRIBES.  If Frank is serious he will use this list to ferret out those that have knowledge of criminal activity – and might, under pressure, talk.

AIG Turns Over List Of Bonus Recipients

AIG complied with New York Attorney General Cuomo’s subpoena this afternoon and turned over the list of employees in the firm’s Financial Products unit who received retention payments.

In a press release, Cuomo’s office emphasized that they were sensitive to the security concerns expressed by AIG CEO Edward Liddy at yesterday’s Congressional hearing. As a result, the Attorney General will be “doing a risk assessment before releasing any individual’s name.”

Here is the release:

via AIG Turns Over List Of Bonus Recipients.

Perp Walks Instead of Bonuses

OPS:  These are not Bonuses – They are BRIBES.   An attempt to quiet whistler blowers

Perp Walks Instead of Bonuses – By Robert Scheer

There must be a criminal investigation of the AIG debacle, and it looks as if New York’s top lawman is on the case. The collusion to save this toxic company in order to salvage the rogue financiers who conspired to enrich themselves by impoverishing millions is being revealed as the greatest financial scandal in U.S. history. Instead of taking bonuses, the culprits should be taking perp walks.

I’m not just referring to the swindlers in the Financial Products Subsidiary of AIG who devised and sold those insurance policies on derivatives that brought the world economy to its knees. They do seem deserving of a special place in hell, and presumably the same divine power that according to Scripture labeled usury a high moral crime and threw the money-changers out of the temple will consider that outcome.

However, the enablers are the AIG leaders who, as New York Attorney General Andrew Cuomo revealed Tuesday, signed those bonus contracts a year ago to reward the very people “principally responsible for the firm’s meltdown.” That’s a cool $44 million divided among the top 10 shysters, even though the depth of their chicanery was well known to top management.

via Truthdig – Reports – Perp Walks Instead of Bonuses.

Liddy: Bernanke and the Federal Reserve approved of bonuses in advance.

Liddy: Bernanke and the Federal Reserve approved of bonuses in advance.

Testifying before Congress today, AIG CEO Gordon Edward Liddy said that the Federal Reserve was aware the bonuses would be paid out and “acquiesced in that decision.” In fact, Liddy claimed that Federal Reserve members were present at AIG’s “compensation committee meetings” with the ability to say “yea or nay”:

REP. KANJORSKI (D-PA): Am I to understand that you’re saying that Chairman Bernanke or his designated person at the Federal Reserve was informed that you were going to make these payments and acquiesced in that decision?

LIDDY: Yes, everything we do, we do in partnership with the Federal Reserve. The Federal Reserve is at our board meetings and our compensation committee meetings and our various meetings on strategy and they have the ability to weigh in — either yea or nay — on anything that we decide.

Watch it:

via Think Progress » Liddy: Bernanke and the Federal Reserve approved of bonuses in advance..

In Nov. 2008, AIG’s Liddy claimed top execs would forego pay raises and ‘2009 bonuses will be restricted.’

OPS:  He lied? Whoda Thunk?

In Nov. 2008, AIG’s Liddy claimed top execs would forego pay raises and ‘2009 bonuses will be restricted.’

In November 2008, AIG succumbed to public pressure and announced that it would limit executive compensation. CEO Edward Liddy announced he would take a $1 salary, while his top 50 executive would “forgo pay raises through 2009.” In a letter to New York Attorney General Andrew Cuomo, Liddy made the following pledge:

AIG is mindful that it must act prudently and, as such, must impose curbs on executive compensation. … To meet these objectives, AIG’s top seven executives (Leadership Group) will receive no annual bonuses for 2008. In addition, the top roughly 60 executives (Senior Partners) including the seven most senior AIG executives, will forego any salary increase through 2009 and their 2008 and 2009 bonuses will be restricted. […]

Finally, AIG is developing a funding structure to ensure that no taxpayer dollars are used for annual bonus or future cash performance awards for the top 60 members of management.

Read the full letter here.

via Think Progress » In Nov. 2008, AIG’s Liddy claimed top execs would forego pay raises and ‘2009 bonuses will be restricted.’.

US to ‘wind down’ AIG in ‘orderly way’: Geithner

OPS:  Ok, but it’s time to ‘wind down’ Geithner ASAP!  HE needs to go too.

US to ‘wind down’ AIG in ‘orderly way’: Geithner

US Treasury Secretary Timothy Geithner said that the government would work with AIG chief executive Edward Liddy to “wind down” the troubled insurer “in an orderly way.”

In a letter to lawmakers Geithner addressed what he described as “considerable outrage” stemming from 160-million-dollar bonuses paid to AIG top executives, and said his department would “explore any and all responsible ways to accelerate this wind down process.”

He said he would “work with” AIG chief executive Edward Liddy “on measures to wind down AIG in an orderly way and protect the American taxpayer.”

AIG, which received billions in US bailout funds, is also to pay back the government for the hefty bonuses shelled out to top executives, Geithner said.

Geithner’s statement comes as revelations about the staggering bonuses which were awarded to employees of the giant US insurer fueled a political firestorm.

via The Raw Story | US to ‘wind down’ AIG in ‘orderly way’: Geithner.

AIG CEO Liddy Calls Bonuses ‘Distasteful’; Testifies Before Congress

AIG CEO Liddy Calls Bonuses ‘Distasteful’; Testifies Before Congress

Edward Liddy to Testify in Wake of Bailout, Bonus Outrage

The CEO of the bailed-out insurance giant AIG will take the hot seat today in a congressional hearing, but may be hoping to cool things off with a report that he will send a letter to AIG executives asking them to return $165 million in bonuses.

The testimony of Edward M. Liddy, who took over as AIG’s CEO in September as part of the government’s rescue efforts for the embattled firm, will come amid a furor erupted over the revelation that AIG awarded fat retention bonuses to employees of the AIG Financial Products unit.

via ABC News: AIG CEO Liddy Calls Bonuses ‘Distasteful’; Testifies Before Congress.

Boss Limbaugh: ‘I Am All for the AIG Bonuses’ – Also Lies about Dems’ Efforts to Restrict AIG’s Corporate Pork

Boss Limbaugh: ‘I Am All for the AIG Bonuses’ – Also Lies about Dems’ Efforts to Restrict AIG’s Corporate Pork

“Let me tell you something, folks. I am all for the AIG bailouts, and I am all for the AIG bonuses. Well, I’m not for the bailouts, well, in a way I’m for the bailout because I’m for the bonuses.”

Just days after alleged death-squad leader Dick Cheney gave his hearty endorsement to Rush Limbaugh as the Republican Party’s new boss, Limbaugh weighed in on the controversy over $400 million in taxpayer-funded bonuses slated to be paid to derivatives traders at insurance giant AIG.

On his radio rantfest yesterday, Limbaugh endorsed corporate pork in the form of taxpayer bail outs of failed mega-businesses and then came out full force in favor of the AIG bonuses, which would use taxpayer money to reward the same traders who created the risky schemes that crashed the world economy. In other words, according to the de facto head of the GOP, corporatist failure must be rewarded:

Rush Limbaugh: “Let me tell you something, folks. I am all for the AIG bailouts, and I am all for the AIG bonuses. Well, I’m not for the bailouts, well, in a way I’m for the bailout because I’m for the bonuses.”

via Pensito Review » Boss Limbaugh: ‘I Am All for the AIG Bonuses’ – Also Lies about Dems’ Efforts to Restrict AIG’s Corporate Pork.

The real scandal at AIG is the not the bonuses. It’s the payments to counterparties.

OPS:  AIG is already  insolvent / bankrupt. THIS is why it is being kept afloat !!!!    You’re tax dollars at work……in other countries

The Real AIG ScandalIt’s not the bonuses. It’s that AIG’s counterparties are getting paid back in full.

By Eliot Spitzer

Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

via The real scandal at AIG is the not the bonuses. It’s the payments to counterparties. – By Eliot Spitzer – Slate Magazine.

Taxpayers unlikely to be fully repaid in AIG mess

The Truth Will Out; Taxpayers Sucked Dry by A.I.G. “Taxpayers unlikely to be fully repaid in AIG mess….No longer can we call it an investment. We just have to call it what it is — and that’s sinking money in a hole.”

Taxpayers unlikely to be fully repaid in AIG mess

Pressure is mounting on the government to revise its bailout of AIG to ensure that taxpayers are repaid as much as possible of the $170 billion lent to the troubled insurer.

Experts warn we shouldn’t expect to get much back.

The problem stems from AIG’s obligations to its trading partners. So far, the hobbled insurance giant has honored in full its contracts with U.S. and foreign banks. It’s paid out more than $90 billion in taxpayer money to keep some of the biggest names in finance from losing money on bad bets linked to subprime mortgages and other risky assets.

As the cost of the rescue swells, experts says it’s becoming harder to envision a scenario in which the government could recoup its full investment. Even though the AIG payouts to major banks have angered critics of the bailout, it might be legally impossible to claw back any of the billions already doled out.

“A contract is a contract,” said Russell Walker, a risk management professor at Northwestern University. “That money all went to people who bought protection from AIG.”

via The Associated Press: Taxpayers unlikely to be fully repaid in AIG mess.

Cuomo Subpoenas AIG

OPS:  He wants to SEE the contracts they say obligate them to pay bonuses

DEVELOPING………………..

Cuomo Subpoenas AIG

Watch out, AIG: Andrew Cuomo’s on your tail. The New York attorney general announced this afternoon the insurance giant hasn’t given him the information he sought about its $165 million in bonuses, and he’s issuing subpoenas for the data. Cuomo had set a 4 p.m. deadline for the information on payments to AIG’s money-hemorrhaging financial products unit, which were sent out Friday. “I believe in transparency and disclosure,” he said on a conference call. “We believe taxpayers have a right to know.” Bailout king AIG is doling out the bonuses over the objections of the Obama administration, claiming it is bound by contracts. But Cuomo says that because the company received federal bailout money, it must consider what’s best for taxpayers: “You could argue that if taxpayers hadn’t bailed out A.I.G., the contracts wouldn’t be worth the paper they were signed on,” he said.

via Cuomo Subpoenas AIG – The Daily Beast.

Obama fails to halt AIG’s $165m bonus payments

Obama fails to halt AIG’s $165m bonus payments

Barack Obama’s crusade against excessive Wall Street pay has hit an obstacle, with his administration admitting that it could not stop the nationalised insurance giant AIG from paying $165m (£118m) in bonuses.

AIG has received $170bn in government money since being saved from bankruptcy in September. The bulk of the bonuses will go to employees in the very business division that wrecked the company’s finances.

Politicians have reacted with fury. Members of the administration took to television studios yesterday to insist that contracts written during the boom times had left their hands tied.

Larry Summers, the president’s chief economic adviser, said: “The whole situation at AIG is outrageous. What taxpayers are being forced to do is outrageous.” But he added: “We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken.”

Mr Obama, who said paying bonuses was “shameful” while companies were on government life support, has found changing Wall Street culture to be more difficult than anticipated.

The administration engaged in a behind-the-scenes battle last week to cut remuneration at AIG. Senior executives agreed to forego some bonuses but Edward Liddy, the AIG chairman, said he was otherwise bound to pay employee’s contractual entitlements.

via Obama fails to halt AIG’s $165m bonus payments – Americas, World – The Independent.