During the collapse of AIG, their credit default swap unit was negotiating with banks who had bought $62 billion in CDS and CDOs from them. AIG wanted the banks to accept discounts of up to 40%. Instead, the New York Fed, then headed by Geithner, intervened and forced AIG to pay full price.
The New York Fed’s decision to pay the banks in full cost AIG — and thus American taxpayers — at least $13 billion. That’s 40 percent of the $32.5 billion AIG paid to retire the swaps.
Wait. It gets much worse. Goldman Sachs, the vampire squid of the investment banking world got quite a lot of that money. The head of the New York Fed at the time was an ex-chairman of the board of Goldman. How cosy.
The deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made. Friedman, 71, resigned in May, days after it was disclosed by the Wall Street Journal that he had bought more than 50,000 shares of Goldman Sachs stock following the takeover of AIG.
Gosh, that certainly seems like it could be construed as insider trading, doesn’t it? Has Friedman been investigated for this? Why was this slimy New York Fed deal even allowed to happen? It clearly was not in the public interest at all, not even slightly and the Fed refuses to make details of it public.
But wait, there’s more.
Ex-CEO of AMD is linked to Galleon insider trading case.
Court documents say Hector Ruiz, who was then CEO of AMD, gave insider info to Danielle Chiesi, a defendant in the Galleon case. Let that sink it. A CEO of a major company has been implicated in insider trading.
Let’s bring back the Martha Stewart standard. She did five months in prison as the result of avoiding a loss of $45,673 by selling a stock early based on insider info. Anyone involved now in insider trading should be judged under that standard too. Because the corruption and stench coming from Wall Street is now unbearable.
The stench is certainly revolting, but was it ever other than that. That’s how the big money moves, it’s all winks, nods and nudges with little friendly chats over a martini or two. It’s a big boys club, the little guys try to guess the “market” and take a risk, the big guys buy information and pay rewards. They’re in it for the money, not for the morality nor the benefit to the public, nor to take a risk. The risk is for others, not the big money. The cases of insider trading coming to light are just the handful that get caught, while the rest just scurry around tying to hide the trail. Busines is business as they say. Where are the fair, honest, high morality bankers and traders? From the fiddling $64,000 to the screwing the public for $billions they are all in it.
Yep. I say, “Screw the stock market, invest in what you can see,” and refer (yet again) to Sharif Abdullah’s article, “Dow Jones Must Die.”