Does the Fed chief really think the rest of planet Earth does not know that the Fed and Treasury bailed out AIG so that Goldman Sachs and other counterparties wouldn’t get hit in the jewels by AIG’s collapse?
AIG didn’t “exploit” anything in taking $35b. in federal money and shoving it right back out the door to Goldman, which got $20b., and others. That was how it was supposed to work — and worked a couple more times when AIG kept coming back. Regulators could’ve resolved AIG back in the fall, but because others like Goldman would have taken big losses, that didn’t happen.
Wait, I take that back. Evidently members of Congress enjoy hearing these fairy tales, they keep calling for more hearings with the same witnesses, spinning the same yarns.
Bonus Observation: Do not miss this fascinating Bloomberg account of how hedge funds — yes, hedge funds — are helping to clean up the toxic housing mess by buying up loans, reducing the principal, and re-setting the terms to something realistic. In other words, what the banks should have done on their own starting in, oh, Q3 of 07 and the very thing the Obama administration wants to spend billions of taxpayer dollars doing.
