DealZone

AIG’s mysterious Schedule A finally revealed

January 27, 2010

AIG/The heavily-redacted regulatory filing that spells out the details of the New York Federal Reserve’s controversial bailout of American International Group is a secret no more.

Reuters has obtained a copy of the five-page document the giant insurer and the New York Fed had asked the Securities and Exchange Commission to keep confidential. The effort by the New York Fed to keep the document under wraps has sparked a furor on Capitol Hill and was the subject of a hearing on Wednesday by House Committee on Oversight and Government Reform.

The unredacted version of the “Schedule A – List of Derivative Transactions” fills out some of the missing pieces in the AIG bailout, in which an entity set-up by the New York Fed effectively funneled tens of millions of dollars to 16 big U.S. and Europeans banks that had bought credit default swaps from the insurer.

The unredacted version of the Schedule A enables some to identify all of the 178 mortgage-related securities, or collateralized debt obligations, that AIG wrote insurance-like protection on.

It’s been known for months that Goldman Sachs and Societe Generale were the two banks who recieved the most money in the dea because they had insured the most CDOs with AIG. But the new information enables traders, investors and the general public to see just which deals the banks had purchased insurance on.

The new information also reveals that of the 178 tranches of CDOs that AIG insured, some 14% were on deals issued after 2005. That’s critical because in December 2007, former AIG Financial Products head Joseph Cassano had said AIG largely got out of the CDS business by the end of 2005.

The newly disclosed information also reveals that Goldman not only bought a lot of CDS from AIG to protect itself; the Wall Street firm also originated a good number of the CDOs that were in SocGen’s portfolio. Some of the Goldman deals in SocGen’s portfolio that AIG had insured includes CDOs with names like Adirondack 2005, Putnam Structured Product CDO 2002 and Davis Square Funding IV.

Janet Tavakoli, a derivatives consultant who has called the AIG bailout a gift to the Wall Street banks, said the issue isn’t just what deals AIG insured, but the underlying assets in those deals. She noted that a goodly number of the CDOs held by the banks also held pieces of other CDOs.

Goldman Sachs, Societe Generale, Deutsche Bank, Merrill Lynch and other banks sold their ailing collateralized debt obligations to the New York Fed-sponsored entity, Maiden Lane III. AIG then canceled out the CDS contracts it had sold as default insurance on those 178 CDOs.

“If all of this had come out in the public domain in late 2008, Goldman Sachs and Merrill would have been deeply embarassed and the Federal Reserve woudl have been questioned,” said Tavakoli.

In the process, the banks were made whole and AIG no longer had to pay out billions of dollars in cash collateral to the banks everytime the CDOs dropped in value.

Comments
4 comments so far | RSS Comments RSS

There’s a reason this document was redacted, genius.

See @EconOfContempt: Congrats Matt Goldstein—you just made it harder for Blackrock to manage ML3 portfolio for taxpayers. Proud of yourself?

Journalists blow.

Posted by jhedges | Report as abusive
 

jhedges: Don’t blame Goldstein. This document was leaked by Rep. Darrell Issa, Republican of California, yesterday and appears on several other websites.

Posted by Citoyen | Report as abusive
 

They never actually posted the schedule A. Here it is.

List of Derivative Transactions Schedule A
to
Schedule A to Amended Shortfall Agreement Shortfall Agreement
CUSIP / ISIN of I Counterparty Tranche Name Notional Value Total Collateral Posted Negative Mark to Market
Underlying CDO Issue I
Assets Included in 12/18/2008 and 12/22/2008 Closing
5 ‘ &Ac I5 Deutsche Bank (LEAFS 2QI)2-lA AlC I $844,492,0471 $106,999,907 $103.217,346
577734AA4 Deutsche Bank MAX 2007-1 A-1 $2,096,537,000 $1,567,311,089 $972,583,514
577734AP1 Deutsche Bank MAX 2008-1 A-1 $5,403,463,000 $4,039,474,369 $2,506,666,486
86331YAL8 I Deutsche Bank STRIPS III 2003-1 AFILT I $35,8836091 $0 $1,953,612
USG26810AB04 GEORGE QUAY DVSQ 2003-1 A-1MT A $89,034,985 $0 $40,937,631
23910PAF2 WACHOVIA DVSQ 2004-2A A-1A MT $66,273,252 $8,149,109 $29,566,558
23910PAG0 WACHOVIA DVSQ 2004-2A A-1B MT $112,636,182 $21,456,667 $50,250,502
23910PBA2 WACHOVIA DVSQ 2004-2A A-1E MM $514,371,900 $58,416,800 $229,477,294
23910PAK1 WACHOVIA DVSQ 2004-2A A-1A MM $70,397,614 $10,755,208 $31,406,564
23910PAJ4 1WACHOVIA DVSQ 2004-2A A-1D MT $0 $35,538,194 $0
G8860MAA4 WACHOVIA TIAA Real Estate CDO 2003-1 A-1MM $162,656,785 $30,281,628 $63,317,543
264403AA4 CALYON JUKEF 2004-7A Al $113,041,931 $113,041,929 $75,776,522
014684AA2 Rabobank International ALEXP 2004-1A Al $58,476,926 $23,390,770 $35,812,822
896008AB5 GSI TRIAX 2006-2AAlB1 $624,552,683 $268,873,344 $210,699,218
352186AB0 GSI VESTC 2006-1A Al B 41JUO,TJUU,UUU $202,058,400 $226,450,058
442454AA2 GSI Hout Bay 2006-1 Class A Trust Certificates $747,122,522 $442,543,147 $460,110,142
JSG00857AA38 SOCGEN kDROC 2005-1 A Al LT $45,394,684 $22,345,127 $18,818,326
JSGO0929AA08 SOCGEN ODROC 2005-2A AiLT $51,454,053 $24,439,104 $22,935,202
JSG8088EAB68 SOCGEN OkLTS2 005-1A ALTA $71,127,697 $33,738,803 $32,364,142
JSGO959TAA63 SOCGEN -3 LHV 2004-1A Al ST $26,985,490 $19,895,992 $15,456,181
JSG26818AB30 SOCGEN DVSQ 2006-6A AlA $24,808,142 $19,791,598 $19,220,827
JSG2861GAA97 SOCGEN DUKEF 2005-HG1A AlLT $209,276,408 $119,758,421 $105,356,614
JSG4161FAB25 SOCGEN GSFIN 2005-1A AlA $63,591,021 $32,670,309 $30,349,861
36293XAB3 SOCGEN GSFIN 2005-1A A1A $83,497,778 $42,897,537 $39,850,687
36293XAC1 SOCGEN GSFIN 2005-1A CP $958,259,397 $480,929,134 $460,408,727
JSG53500AA53 SOCGEN I.GNA 2004-1A AIST $24,806,916i $17,237,018 $10,014,009
JSG5814LAA91 SOCGEN VGATE 2004-1A AlS $124,378,1551 $37,442,178 $54,070,824
JSG81230AB35 SOCGEN MADRE 2004-1A AlA $24,514,5211 $12,306,026 $9,876,695
JSG9725LAA91 SOCGEN WITH2004-1AA1 $166,729,812 $91,034,477 $88,162,400
147276AA7 ML CASF 2004-1A A1 $179,360,155 $57,819,432 $80,857,962
68936RAN7 ML ‘MRCY2004-1AA1VB $177,090,112 $58,623,523 $84,112,692
640699AA2 ML NEPTN 2004-1A Al LA $101,95o,80g $56,375,710 $66,152,162
34069RAA2 ML NEPTN 2005-2A Al $148,707,002 $101,506,317 $111,605,440
34129VAA9 ML SCF 5AAl $106,521,790 $3,086,130 $40,031,923
36258PAA0 ML STRAG 2004-2A Al $94,150,454- $941,505 $41,044,472
563286AA8 ML :3TRVL 2004-1 A Al $431,629,325 $149,051,969 $182,564,841
26440VAA2 I ML DUKEF 2005-8A Al S $300,222,144 $178,080,031 $207,052,265
348667AA4 ML FISHR 2005-1A Al $199,732,740 $114,621,550 $117,701,962
37638XAA7 ML 3LCR 2005-3A A1 $83,637,994 $35,484,845 $54,979,557
8205YAA5 ML dPTR 2005-2A A1 $539,208,535 $261,797,590 $281,901,277
Page 1 of 6
CONFIDENTIAL FRBNY-TOWNS-R1-045769

Posted by sakesan | Report as abusive
 

Sorry, you did post link to sch. A.

This pyramid scheme should be treated as a felony.

GS, ML, and SocGen set this up knowing full well the consequences.

Taxpayer bailout just to pay their bonuses.

Ten years ago their were more people in law school than actual Lawyers.

Where are they now.

The law and the justice department are a joke. Inspiring criminals everywhere to do the same.

Posted by sakesan | Report as abusive
 

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