Video: Sen. Chris Dodd (D-CT) and Jim Bunning (R-KY) criticize Fed Chairman Bernanke over the stealth Wall Street bailout via AIG -- December 3, 2009
You've been waiting 12 months for these questions to be asked of Geithner, Paulson, Lloyd Blankfein, Stephen Friedman and the sitting Fed Chairman.
Last Thursday it was Bernanke's turn; start the clip at the 12 minute mark. Runs 2 minutes.
- “I don't understand that at all, and most Americans don’t,” Dodd told Bernanke, echoing criticisms made by several other senators during the hearing. “That was billions of dollars. One company alone [Goldman Sachs], it was $12.5 billion. And it's just hard to accept the notion that we couldn't negotiate with the counterparties at that time.”
- “We had no leverage,” Bernanke replied, explaining that most of the counterparties were foreign firms.
- “You're the chairman of the Federal Reserve. You've got power,” Dodd shot back.
- “I don't abuse my supervisory power,” said Bernanke.
- “Apparently not, in that case,” Dodd said.
---------
Later in the hearing, the issue was raised again, to which Bernanke responded:
- "I didn't want to convey that we didn't want to get the haircut. We did and we tried."
- "The only way to get the haircut is to have a credible threat that if you don't take the haircut they're going to go bankrupt and you're going to lose everything. And since we had intervened to prevent AIG from going bankrupt, it just wasn't credible. We just didn't have the leverage to threaten a bankruptcy."
----------
Unfortunately, for Bernanke and Geithner this statement is demonstrably false. Just examine the bailouts of GM and Chrysler, where the government took control and then threatened bankruptcy in order to force SENIOR and SECURED debtholders to take severe haircuts, going so far as to publicly ridicule the holdouts for 'not being patriotic.'
But Bernanke and Geithner want us to believe that the same government was powerless in negotiations with AIG creditors. Honestly, it's a ridiculous argument, and I'm surprised that it was chosen as AIG negotiation talking point.
Still, for the sake of discussion, let's assume Bernanke is telling the truth that the FED had no leverage. Then, will someone at the NY Fed, or preferrably Bernanke himself, explain this passage from last month's groundbreaking article at Bloomberg:
Still, officials at AIG object to the secrecy that surrounded the transactions. One top AIG executive who asked not to be identified says he was pressured by New York Fed officials not to file documents with the U.S. Securities and Exchange Commission that would divulge details.
"They’d tell us that they don’t think that this or that should be disclosed,” the executive says. “They’d say, ‘Don’t you think your counterparties will be concerned?’ It was much more about protecting the Fed.”
So not only did Friedman-Geithner-Bernanke-Paulson give away your money with no strings (warrants or preferred shares) they insisted that AIG cover it up.
In any other time, it would be criminal to steal $25 billion from taxpayers and give it to Wall Street and European banks, but big media remains silent in their adoration of Obama and his minions. Friedman has resigned from the NY Fed; Paulson lives on a private island; but Bernanke and Geithner are still in power. Even better, owing to the timing of his reappointment, his 2nd term is now pending Senate approval. In that spirit, could there be a better Christmas gift to the American people than the following:
- Vote and passage of HR 1207-S 604 to audit the Federal Reserve
- Senate defeat of Chairman Bernanke in his nomination to a 2nd term
---------------
PLEASE email, facebook, re-tweet, share and take our stories with you when you leave. Our only weapon against the madness is GREATER AWARENESS. Just by sending this story to a few friends, you'll be contributing to the formation of an aggressive, educated voter base that understands the economic peril of our failed debt, deficit and spending policies. Thank you.
---------------
Watch (don't click unless your coming from the email newsletter or RSS)
---------------
