Tag Archives: American International Group

Brett Redmayne-Titley ~ Banks Have Almost Zero Cash: Prepare To Lose Your Savings

“Bail-ins, the new “systemically” correct term for public financed bank fraud, are already named in national policies and laws, appearing in multiple countries. These finance laws, such as Dodd-Frank and its pending European Union version, make legal and allows for failing G-SIFI banks to legally convert the funds of “unsecured creditors” into capital. Those creditors include “secured” creditors, state and local government funds, and ordinary bank depositors, just like you!” ~B Redmayne-Titley

G-SIFI = Globally Active, Systemically Important, Financial Institutions”

Banksters Just like in 2007, the predictable upcoming financial crash will arrive suddenly overnight and the new day’s world economy will be in chaos. At the starting gun of this “run on the banks,” you had better be pretty quick.

Your bank has almost zero cash.

“I’m sorry, Sir. We are unable to cash this check,” were the ominous words delivered to me by a fresh faced, none-too-friendly, Wells Fargo Bank manager. He had just kept me waiting ten minutes while in consultation about my transaction. Returning to his cubicle he sat down quickly, now looking at me intently through narrowed eyes.

Three feet away, between us and in front of him, were three forms of my personal identification face up. He gazed down glowering at two checks also before him, written to me by a client and drawn on his bank. Not being a “Well’s” customer I expected a shake-down, hence the multiple forms of ID.

The two checks totaled a seemingly paltry sum of almost US$8,000.00. Not expecting this much difficulty I insisted on a reason, to which he replied, “I’m sorry, but the bank does not have sufficient funds on-hand to cash these checks.”

Really? Naturally, like the majority of capitalist indoctrinated bank depositors, I assumed that, as is traditional with banks, this one would have lots of cash. Au Contraire.

Unapologetically he informed me that he was “sorry” but he could only cash one of the checks at this time. Both checks were for about the same amount. I inquired if this was a new bank policy and was told that the bank simply did not have enough cash, and, “no”, I could not come back at the end of the day after the bank had received the days cash deposits. However, if I went to a larger branch they might be able to handle both checks.

This rather unique news seemed worth delving into further, so I declined his kind offer and left with my two onerous withdrawals.

Since I was away from home I decided to wait and stop by my town’s main Wells Fargo branch office.  For anyone following the factual and very dire condition of the world’s economy and its banks, and their growing list of financial crimes against humanity, my sojourn into the realm of Kafka would be amusing but cautionary venture.

Those evil banks. The shadowy Zionist denizens of New York, London, and Brussels are guilty of a staggering set of every-expanding frauds couched in the beneficent language of greedy short term materialistic personal gain. Financial “crimes of the decade,” like the Savings and Loan meltdown, the Enron Collapse, and charlatans like Bernie Madoff are nowadays reported regularly. Continue reading

James Hall ~ Repeal Of Glass-Steagall And The Too Big To Fail Culture

BATR  April 23 2014

Bank_TooBigToFail_GlassSteagallDuring the 1990’s the conventional economic wisdom supported the repeal of Glass-Steagall. However, “10 years later, the end of Glass-Steagall has been blamed by some for many of the problems that led to last fall’s (2008) financial crisis. While the majority of problems that occurred centered mostly on the pure-play investment banks like Lehman Brothers, the huge banks born out of the revocation of Glass-Steagall, especially Citigroup, and the insurance companies that were allowed to deal in securities, like the American International Group, would not have run into trouble had the law still been in place.”

This assessment by Cyrus Sanati, also seems to be the typical perception, now that the anemic rescue of the economy struggles to claw back to pre 2008 levels. The separation of commercial banks and investment banking was a cornerstone in finance, since the Banking Act of 1933 established a protective firewall. The Corporatocracy culture that operates as todays dominate economic model, adopts the “Too Big To Fail” paradigm. Tapping an unending stream of capital for acquisitions, mergers and poison pill financing to fend off unwanted suitors, is a continued requirement to survive in a global investment environment, where soveriegn wealth funds operate as preparatory pirates.

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Dean Baker ~ Let’s Get This Straight: AIG Execs Got Bailout Bonuses, But Pensioners Get Cuts

CommonDreams  December 10 2013

No one has accused city workers in Chicago or Detroit of bringing down the economy, but they could face pension cuts

Pensioner_TheBanksOweUsAs we passed the fifth anniversary of the peak of the financial crisis this fall, the giant insurance company AIG was prominently featured in the retrospectives. AIG had issued hundreds of billions of dollars of credit default swaps (CDS) on subprime mortgage backed securities. When these mortgage-backed securities failed en masse, AIG didn’t have the money to back them up.

City of Detroit pensioner Donald Smith sits across the street from the Federal Court House, to protest cuts in city workers’ pensions. (Photo: Rebecca Cook/Reuters)This would have forced AIG into bankruptcy. However Lehman had declared bankruptcy the day before and the world was still engulfed in the aftershocks. The Bush administration and the Federal Reserve board decided that they would stop the cascade of failing financial institutions and bail out AIG. As a result, the government agreed to honor all the CDS issued by AIG and effectively became the owner of the company.

Chicago has been in the news recently because its mayor, Rahm Emanuel, seems intent on cutting the pensions that its current and retired employees have earned. Emanuel insists that the city can’t afford these pensions and therefore workers and retirees will simply have to accept reduced benefits.

If the connection with AIG isn’t immediately apparent, then you have to look a bit deeper. Folks may recall that AIG paid out $170m in bonuses to its employees in March 2009 with its top executives receiving bonuses in the hundreds of thousands of dollars.

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Matt Taibbi ~ AIG CEO Robert Benmosche Compares Bonus Criticism To Lynch Mobs

RollingStone  September 23 2013

Robert Benmosche, CEO of AIG

AIG has a lengthy history of producing some of the biggest tools on Wall Street. Former CEO Maurice “Hank” Greenberg was considered one of the world’s preeminent unapologetic narcissists even before he sued the government for providing an insufficiently generous bailout. Joe Cassano, former chief of AIG’s financial products division, was another: first he arrogantly blew off the accountants who warned him his portfolio of hundreds of billions in uncollateralized bets might destroy the world, then told clients pre-crash his portfolio wouldn’t lose a dollar, and then after it all went kablooey, tiptoed back to D.C. (after first being assured of not being prosecuted, mind you) from his lavish four-story townhouse in London just long enough to tell the Financial Crisis Inquiry Commission that he had absolutely nothing to be sorry about and they could bite him and his hundreds of millions in earnings if they disagreed.

Now a third AIG executive enters the pantheon of tone-deaf AIG bigwigs: CEO Robert Benmosche, who just told the Wall Street Journal that the post-crash public outcry over the use of bailout money to pay bonuses to executives in Cassano’s Financial Products unit was comparable to – get this – lynchings in the deep south. From reporter Leslie Scism’s interview:

The uproar over bonuses “was intended to stir public anger, to get everybody out there with their pitch forks and their hangman nooses, and all that – sort of like what we did in the Deep South [decades ago]. And I think it was just as bad and just as wrong.”

For sheer “Let them eat cake”-ness, this ranks right up there with Lloyd Blankfein’s “I’m doing God’s work” riff and Berkshire Hathaway billionaire Charlie Munger’s line about how it was proper to bail out Wall Street, but people in foreclosure should “suck it in and cope.” A few notes:

First of all, any white guy anywhere, rich or poor, who steps out in public wearing the mantle of 400 years of black suffering instantly shoots to the very top of the world asshole pyramid. Most white people grasp this instinctively. If they don’t already teach it in kindergarten to make sure the rest get it, they ought to.

But when you’re a white guy who just presided over a year of declining across-the-board sales but got a 24% pay raise anyway, to $13 million a year, largely because your company is invested in a market that’s overheating due to massive Fed intervention, and you’re so grateful for your cosmic good fortune that you immediately go out and publicly nail yourself to the cross of black victimhood – and not while stone drunk and with buddies at a bar, mind you, but sober and sitting in front of a Wall Street Journal reporter – that’s like a whole new category of asshole. Try to compute just exactly how obnoxious that is – you’ll be doing it until the end of time, like someone trying to figure pi.

Benmosche’s nooses-and-pitchforks fantasies have their origins in stories about some AIGFP executives who were made to feel uncomfortable by angry crowds on their way home from work, and one about a teacher somewhere in the Midwest who ridiculed in her third-grade class a child whose father worked at the firm. That last bit of course would be very wrong if it did happen, and it may very well have.

Still, comparing being leered at on a train for continuing to collect a huge undeserved bonus from the taxpayer to being taken from your wife and family and hung from a tree for no reason at all is preposterous on at least a hundred different levels. Worse still, Benmosche doubled down on his crazy by explaining that part of the “lynching” was in trying to cheat innocent AIGFP employees out of money they may naturally have needed to keep living beyond their means:

Now you have these bright young people [in the financial-products unit] who had nothing to do with [the bad bets that hurt the company.]. . . They understand the derivatives very well; they understand the complexity. . . They’re all scared. They [had made] good livings. They probably lived beyond their means. . . They aren’t going to stay there for nothing.

It’s a minor detour in the story, but this whole notion of angry meanie taxpayers ignorantly trying to rob the poor AIGFP employees out of their hard-earned bonuses was always a fiction.

The vast majority of those FP workers would normally have been counting on performance bonuses, but since AIGFP not only didn’t perform that year, but created a historically bottomless suckhole of losses that nearly destroyed the universe, there were, alas, no performance bonuses to be had.

So management cooked up a bunch of “retention bonuses” for many of the unit’s employees. This always seemed like a scam, a way of yanking a little last value out of a company most thought was headed for collapse. Moreover, the notion that the taxpayer needed to pay millions in “retention bonuses” to prevent other financial firms from poaching employees of the biggest financial disaster/PR-cancer firm since Enron or Union Carbide – and this at a time when mass layoffs on Wall Street had flooded the labor market with thousands of other highly-qualified financial professionals who would have taken huge pay cuts just to keep working – was always absurd.

Then Benmosche dropped one last bomb:

We’re trying to find the villains [for the financial crisis]. There’s got to be a villain somewhere. The problem is that there isn’t a villain. There are villains. And they are everybody. They are the speculators in real estate. The people who flipped houses. People who lied and cheated [on mortgage applications]. Nobody did the income appraisals. … I include myself in there. I knew stuff was wrong.

Benmosche worked in high-level positions at both Credit Suisse and MetLife in the pre-crisis years, so one assumes he’s talking about those jobs when he hints there was a time when he “knew stuff was wrong” with the mortgage bubble but apparently didn’t say anything. So he kept his mouth shut and got rewarded for non-acting in the face of crisis with a job running AIG, where he sucked millions in comp from the taxpayer for years, which must have seemed only natural to him.

In tossing out this “everyone was a villain” line, the CEO, of course, only mentioned the small subset of ordinary people who were “villains” in those days, the low-level speculators who flipped houses and the homeowners who lied on their mortgage applications.

He conveniently left out the bigger institutional players who birthed this scheme, like the giant investment banks (including for instance Credit Suisse, where he worked) that not only knew that mass fraud was being committed at the mortgage application level but encouraged it, so that they could speed up the process of pooling and securitizing those mortgages and selling them off to unsuspecting third parties. Just to take the one example of his own former bank, investors in the mortgage securities sold by Credit Suisse incurred over $11 billion in losses, according to a complaint filed by New York AG Eric Schneiderman against the firm last year.

Banks knew, lenders knewratings agencies knew, and then of course firms like AIG knew that something was deeply wrong with the booming mortgage markets in the years leading up to 2008. The peculiar trade of AIGFP was the obviously crazy practice of selling hundreds of billions of uncollateralized insurance to the Goldmans and Deutsche Banks of the world, who in many cases were using these policies to bet against their own products. The 377-odd employees of that sub-unit of AIG took home over $3.5 billion in compensation for such socially-beneficial service in the seven years before it all went bust. If finance-sector pros in those years had reservations about where all that money came from, most, like Benmosche himself, kept them to themselves.

Stories like this “hangman nooses” thing give some insight into the oft-asked question of how the 2008 crisis could ever have happened, the answer being that the people who run our economy, like Benmosche, are basically idiots. They can read a spreadsheet and get through an investor conference call sounding like they know what they’re talking about, but in real-world terms, your average pimp is usually an Einstein in comparison.

These people are so used to being told by interns and finance reporters and other ballwashers that they’re geniuses that they pretty soon come to believe it, which is how concepts like “We’ll never lose a dollar – it’s all hedged” go unchallenged in rooms full of econ majors who’ve just bet the whole store on the mortgages of underemployed janitors and palm-readers. Somebody, please, tell these guys quick how smart they’re not, or else we’ll be in another crisis before we know it.