DealZone

Senate’s roast of AIG regulators

March 5, 2009

AIGNow that the government has yet again propped up the embattled insurer, Congress is hauling regulators over hot coals as they try to figure out what happened. Here are some highlights from testimony today:  

Senate Banking Committee Chairman Christopher Dodd:
“That we find ourselves in this situation at all, is in my mind, and in the minds of many of my constituents, quite frankly, sickening. …

“The lack of transparency and accountability in this process has been rather stunning. Throughout the entire fourth quarter last year, it was frankly never clear, who owned AIG, or who was in charge.” 

Federal Reserve Vice Chairman Donald Kohn:
“No one was minding the whole company and looking at how things interacted, and whether the whole company would, under some circumstances, put the financial system at risk.”

Acting Office of Thrift Supervision Director Scott Polakoff:
“It’s time for OTS to raise their hand and say we have some responsibility and accountability here.”

(Reporting by Reuters’ Washington bureau)

(Photo: REUTERS/Yuriko Nakao)

Comments
14 comments so far | RSS Comments RSS

We wouldn’t want to let the companies fail in Europe……because the American people would find out just who was involved in this coruption! Better to destroy all of the American people’s retirement accounts, and then, have them bail out the people who should be in JAIL!!!!!!!!!!!!

Posted by Don Kelderman | Report as abusive
 

The mounting AIG losses and after the fact moaning of federal lawmakers confirm governments should not be involved in attempts to directly influence or structure the marketplace.
They simpy do not have sufficient business expertise or grasp of issues. The weakness in oversight by federal and state regulators is unconscionable.
Governments role is to ensure there are appropriate mechanisms to support growth,legislation to maintain fairness among market participants and enforceable penalties for those who break the rules. They should not be sending good taxpayer money after bad.

Posted by Jim Howard | Report as abusive
 

Well, AIG is a global insurer, and is a giant. Letting it down like Lehman Brothers would extensively damage the fulcrum of high precision finance, that is the derivatives markets, where multi-billion deals would lead to the collapse of the world financial order (i.e. a systemic risk, where global capital flows would dry up, and hinder developent in emerging economies. Well, the decision of the US government to step in was a good move, that I personally acclaim. But to oil the engine of growth of the American economy, its unfortunate that we have to side towards more public deficit and making the wealthy come to the rescue of the American economy.

In conclusion, we are through tumultous times, not experienced since the Great Depression (due to the misuse of structured finance). Well, effort on many governments need to be aligned so that their corrdinated efforts give rise to a new world economic order based on prudence and disclosure, and not Madoff or Stanford-like ones

Posted by Pravesh | Report as abusive
 

It is amazing that we can continue to bail out the big guys when there are medium guys you can take over what these none responsive and irresponsible companies are doing. How about bailing out us the people of the USA. Thought… The amount of money being spent as a so called stimulus would have been better suited and more stimulating to the USA as well as other countries by giving all this money equally to the citizens to pay off the debts secured or unsecured and spend their monies left on the economy and products. A six figure stimulus check to us the tax payers would have helped this economy out more than anything.

Posted by JR | Report as abusive
 

Is there anyone who doesn’t see red flags when CEOs etc. can get millions of dollars as bonuses, when their company is losing money by the bushel?

The appaling greed, and corruption that is rampant in our society is suddenly dooming the American way.

These guys should be prosecuted, not bailed out!

 

Which would be the greater cost to the taxpayer, to continue to bailout AIG or to let AIG go bankrupt and simply assume the amount of the benefits in the AIG insurance policies?

Posted by William Hoffman | Report as abusive
 

Am I under the impression aig insured all these mortgages that are now failing; and China holds most of these securities? And then we can’t let aig fail; because China will suffer the loss.

 

What a joke to see Dodd – who still hasn’t come clean about his “sweetheart mortgage” from Countrywide, preaching to AIG officials. He apparently still doesn’t understand the fact that government – particularly dishonest legislators – are the problem rather than private business. The best thing that could happen is for Congress to go on a two year vacation. Then we wouldn’t have these stupid show biz hearings which accomplish nothing, and only serve to let congressmen and Senators mug before the cameras

Posted by J. Wells | Report as abusive
 

Let me see if I understand this. #1, Spitzer attacks Greenberg who quits March 2005. #2, The SEC sues to keep some documents secret. #3, Flash forward 36 months and the company fails due to hidden risks, at the same time the new executive are getting richer. #4, But, wait.. one more.. The Gov’t then decides not to let it go thru bankrupcy (where all the info would be public) instead they do a Euro-Socailist equity funding (where the Gov’t leaders – aka BOPs – can now get richer).
WOW. If read this in a book I’d call it fiction. Personally it looks like a Mob move to me!

Posted by FloridaRobert | Report as abusive
 

The government needs to take over AIG and audit it. All transactions they may that were illegal should be declared null and void, let the gamblers take their losses just as they do in Las Vegas, or the stock market (another piece, a world of unregulated corruption). That these institutions where lending money to people speculating on homes, valued at blatantly rediculous prices, three times their worth, is apalling! Let the gamblers take their lumps, and return any and all taxpayer funds extended to AIG. I also understand AIG is deeply envolved in the CIA. The “shadow government” is no myth. And while you are at it, reveal how the CIA assassinated JFK because he wanted to get rid of the Federal Reserve Bank, and investigate what role the CIA or NSA had in 9-11. That we went to war over 3000 dead when each year 350,000 succumb to tobacco smoke alone (an addictive, poisonous commodity subsidized by our inept government to poison its citizens and humans all over the world)points to the stupidity of this whole mess we are in. If you don’t reign in AIG, then why don’t you give every American 2 million dollars of “winnings, or mad-money” and see what happens. Yeah, I know, massive inflation as money becomes something you ‘get’ or ‘connive for’ rather than something you work for honestly. Now, do something! The Democrats and Republicans should be congratulating each other in destroying the Planet, instead of playing the blame game!

Posted by Gerald Sobel | Report as abusive
 

AIG thought it would just take commissions and be the bookie for all the bets. The copula would pit one variable against the other. It worked for awhile. Some people are reaping big rewards as we speak.

Posted by Ken | Report as abusive
 

WHO CARES if AIG fails.
I have a life insurance policy with AIG and I would rather it fail and have me go find another policy than to have Goldman Sachs and the rest of the banking elite steal the future of our children.
Again, LET IT FAIL!!

Posted by ki tostig | Report as abusive
 

where is this Frankel “vice chairman” of AIG hiding.
why is this guy continur to be paid lots of$$$.
and why he is not called to answer for his responsibility for all the mess and to clawback all the money he didnt desrve.
strul

 

why continue to employ the same people who caused all this mess.
frankel had the gall to claim he was not involvoved in decission making. then what was he doing.
strul

 

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