Forget the good bank/bad bank, I have an even bigger beef with this INSANE absurdity: Why are the taxpayers making good on hedge fund trades gone bad?
... This was nothing more than a giant scam, perpetrated by the people who were running the AIG hedge fund.
It was exempt from any form of regulation or supervision, thanks to the Commodities Futures Modernization Act. This ruinous piece of legislation was sponsored by former Senator Phil Gramm (R), supported by Alan Greenspan (R), former Treasury Secretary (and Citibank board member) Robert Rubin (D), and current presidential advisor Larry Summers (D). It was signed into law by President Clinton (D). It was the single most disastrous piece of bipartisan legislation ever signed into law.
As you might have guessed by now, this portion of AIG is the INSOLVENT half.
Here is the question that every single taxpayer should be asking themselves: WHY AM I PAYING $1000 TO BAIL OUT THIS GIANT HEDGE FUND?
Of all the many horrific decisions that Hank Paulson made, this may be his very worst. That is a very special description, given his track record of incompetence and cluelessness.1
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Source:
1. Barry Ritholtz. Solvent Insurer / Insolvent Insurer.
The Big Picture. March 4, 2009.
http://www.ritholtz.com/blog/2009/03/solvent-insurer-insolvent-insurer/
© 2009 Michael Cale
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