We’ve been asking this question for a few months now: Why did Tim Geithner tell the TARP special inspector general that the “the financial condition of the counterparties was not a relevant factor” in the $180 billion bailout of AIG?
Today, Bloomberg’s Hugh Son is on the case, noting that quote in his lede and calling bull on it:
Timothy F. Geithner, who has denied that the financial condition of American International Group Inc.’s bank counterparties was a consideration in structuring the insurer’s bailout, was told by a senior colleague that the rescue was a way to remove “uncertainty” for the firms.
It never made any sense anyway, and it’s great to see Bloomberg take this head-on. And Darrell Issa, the Republican congressman, has taken the key leadership role on this AIG issue. Sounds like a profile to me.
—The Wall Street Journal also has a very interesting bit of reporting in the “Overheard” section of its Heard on the Street column today.
As everybody knows, AIG got a huge government bailout in September 2008 to help make payments on derivatives contracts with banks, including Goldman. Yet in the previous month, Goldman approached AIG about “tearing up” its contracts, according to a November 2008 analysis by BlackRock, then an adviser to the New York Fed.
That’s a tantalizing nugget. If BlackRock is right, it presumably means Goldman was willing to take a haircut on those infamous credit-default swaps—until Uncle Sam came doddling along to dole out our billions. Zero Hedge has the emails. I’d stay tuned on this one.
More hard questions for Geithner, who’s up to testify before Congress later this week.
— Read this Glenn Beck transcript if you want to know how not to analyze the stock market:
This is President Obama’s approval rating by Rasmussen versus the S&P. The S&P here is the blue line. Here’s the S&P, got it?
As Obama goes down, the S&P goes up. Now, any statistician is going to tell you correlation does not show causation — whatever.
Let me throw a theory out here: One thing people really care about is money, right? Your life, how much pocket money do you have? As investors saw Obama’s popularity drop and realize the vision of more government, more spending, more strangling of the free-market, more taxes, might not pan out, people begin to invest.
Look at the dates: The 19th of February — 19th of February, almost to the very bottom of the S&P. This is the day that CNBC’s Rick Santelli did his famous tea party rant. The S&P then hit bottom.
The best is definitely the whole “Now, any statistician is going to tell you correlation does not show causation — whatever” part.
Next, crazy ol’ Glenn will try to pitch you some gold!
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.