The first, on Friday, concerned emails from Fed personnel addressing the filing of detailed information regarding AIG's payments to counterparties. The Fed directed AIG to conceal details which AIG personnel indicated the SEC would prefer reported.
Aside from the obvious issue of one hand not knowing what the other is doing, or there being conflicts between federal entities on what they demand/require of companies, there's the issue of transparency.
The Fed's position smacks of concern that the actions it directed AIG to take were ones it would be unable, or unwilling, to explain and defend in public.
This sort of clandestine action by government, with a major once-private, then questionably "taken" by government, ought to be very worrisome to the business community.
A day later, in the weekend edition, the Journal published, as its customary single, long interview with a prominent business person, a piece by Holman Jenkins regarding his recent conversation with former AIG CEO Hank Greenberg.
I won't reprint major portions of Jenkins' piece. Suffice to say, Greenberg made his major theme that the business press needs to ferret out why Goldman Sachs, Morgan Stanley, Citigroup, et. al., were saved by federal cash, while AIG was, instead, marked for takeover and eradication.
Greenberg mentions something about which I was unaware, and I'm sure I'm not alone. He explained a 2005 change in the operation of credit default swaps by ISDA, the International Swaps and Derivatives Association. The change essentially changed such swaps from having value changes settled once, at maturity, to being ongoing 'mark to market' payments. He doesn't allege, but asks, whether or not Goldman Sachs, which bought large amounts of such swaps from AIG, was behind this change?
He also bluntly challenges the press to discover why AIG was treated so differently by Paulson and Bernanke than were the commercial and investment banks?
One passage really does deserve to be quoted,
"Most of all, he cannot fathom why Treasury and the Federal Reserve let billions of dollars fly out the backdoor to Goldman and other firms. Washington could have simply ordained that AIG's debts were the government's debts and so no collateral was due given Uncle Sam's bulletproof credit rating."It's a more than fair point. And Greenberg, never a fool, is clever to call for objective press investigations into this mess.
If you see unholy alliances between Goldman and the Treasury and/or Fed, made in the shadows, then you find yourself agreeing with Greenberg's demand that somebody force explanations.
Even if you don't see such alliances, it still makes sense that, over a year later, the major players explain exactly why such differential treatment was demanded for AIG, than the commercial and investment banks which the government elected to save.
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