AIG Bailout Boondoggle

The term "Bondoggle" was first coined in the 1930's to describe government projects that had no real purpose other than spending money.


Today's definition is as follows:

a project funded by the federal government out of political favoritism that is of no real value to the community or the nation.
–verb (used with object)
4. to deceive or attempt to deceive: to boondoggle investors....



The term"Bailout" was originally coined to describe the proces of escaping a plane crash in the 1950's.



Today's definition has evolved to the following:



an instance of coming to the rescue, esp. financially: a government bailout of a large company. [Dictionary.com]



But the AIG "Bailout Boondoggle" is developing into something of a novelists dream. As of today both the Federal Reserve Board and the Treasury Department along with the Federally appointed oversight Board of Directors of AIG, collectively refuse to give precise details regarding the bailout.



Then AIG in congressional testimony revealed that they were not insolvent at the time of the bailout and did not need a bailout. AIG revealed that they took the position that traditional insurance policy clauses in their policies buffered them from fraudulent acts by the lenders and borrowers of the failed mortgages.



That is, the loans that went bad from FREDDIE MAC, FANNIE MAE, Citigroup, Merril Lynch among dozens of others were given insurance by the giant insurer as a result of fraudulent misrepresentations made by the lenders and/or were given as a result of statements by the borrowers that the lenders knew or should have known were fraudulent.



However, Federal Treasury authorities along with members of the New York Federal Reserve Bank alledgedly told AIG that if the giant insurer did not assert its rights to relief due to fraud the FEDS would bail them out financially.



Now an unusual coalition of Congressional Conservative Republicans and prominent members of the Black Congressional Caucus are committed to forcing the bipartisan group of financial managers to reveal all of the AIG financial figures.



Recently the Wall Street Journal reported that from a leaked document they learned that US Funds funneled through AIG went to a list of prominent US and International Financial Institutions including the following:



Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group. [Reuters]



Senator Christopher Dodd, the Democrat who chairs the Senate Banking Committee said, "The lack of transparency and accountability in this process has been rather stunning." [Reuters]



In my opinion it appears as though a cabal of financial players have grabbed control of large portions of the countries money and banking system. It appears as though they are both Republican and Democrat in political orientation. They are cloaking their actions as necessary to "save the system". But so far they are refusing to name which of their friends benefited from the "bailout" funds given to AIG and it looks very fishy.



It certainly would have been more transparent if the Fed had simply allowed AIG to assert its right to refuse to honor fraudulent insurance claims and save the individual banks from the fraudulent claims made by Freddie Mac and Fannie Mae.



But that may be the exact reason they did it this way...as a means of hiding what really happened and who is actually being saved.