Jeff Smith 4 p.m., Sept. 23
San Diegans Leading Push for AIG Full Disclosure
It looks now like American International Group (AIG), the big insurance concern that is 80% owned by the federal government, will dwarf Enron and the Madoff Ponzi scheme in corruption, particularly since the Treasury and Federal Reserve appear to be a part of a giant coverup. It now appears that the Fed influenced AIG to not reveal that a huge payment from the federal government went right out the back door to the likes of Goldman Sachs and major foreign banks that got paid 100 cents on the dollar when 20 cents would have been more than adequate. The Fed knew there would be a public outcry; AIG withheld the information until later.
It turns out that on Dec. 30, 2008, the Securities and Exchange Commission asked AIG why it had not provided information on $62 million of derivative transactions. This is the same information that the San Diego law firm of Aguirre, Morrison & Severson has been seeking. It is suing AIG in Los Angeles Superior Court, charging, among many things, that AIG funneled money from insurance operations to gamble in derivatives. The suit seeks to protect California policyholders. In May of last year, Mike Aguirre of the firm tried to get the documents under Freedom of Information Act guidelines. The Treasury would not cooperate. So in June, he sued in federal court in San Diego, where the case, which has been amended, is still pending. "The Treasury is hiding the ball," says Aguirre. He suspects that the collateral that AIG provided the government was bad. If so, that's a felony, he says.
On December 20, Frank Partnoy of the University of San Diego law school co-authored an op-ed in the New York Times saying, "AIG is was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and political relations that set off the economic cataclysm of the past two years." Partnoy said that "a trove of e-mail messages still backed up on AIG servers," as well as a number of documents, should be made public. San Diego Congressman Darrell Issa released some emails between AIG lawyers and the New York Federal Reserve, in which Fed lawyers said that certain items should not be disclosed. Now there will be Congressional hearings that could be blockbusters.
More like this:
- AIG (That's Us) to Pay Its Ex-CEO's Legal Fees — Nov. 25, 2009
- Judge Rules Fraud Case against AIG Can Proceed — Oct. 8, 2009
- AIG Policyholders at Risk, Say NY Times, Local Suit — July 31, 2009
- Why Haven't State Regulators Gone After AIG? — June 13, 2009
- Arthur Levitt — Again — April 15, 2009