Fed Cover-up Surrounds Goldman/AIG Scandal

Two weeks after I wrote a commentary (“The Goldman Sachs/AIG Saga”) observing that it appeared that Goldman Sachs had intentionally scammed AIG by getting it to underwrite “credit default swaps” - which it knew would blow up and provide huge profits for Goldman – it appears that some members of the U.S. government are now reaching the same conclusion.

To add to this scandal, new information publicly released today indicates that the Federal Reserve was heavily involved in a cover-up – where it appears that the Fed also knew that Goldman Sachs was ripping-off AIG with those CDS contracts. More specifically, it was then-president of the New York Fed, Timothy Geithner, who a) ordered AIG to pay-out 100 cents on the dollar on these scams; and then b) ordered AIG to cover-up how much it had paid out on those contracts as well as all information on the recipients of those windfall-billions.

I had previously assumed that Geithner had been promoted to Treasury Secretary because he was a confirmed tax-cheat, who had slept through his entire tenure as president of the New York Fed (and Wall Street's chief regulator). I was wrong. Obviously, the banksters of Goldman Sachs awoke Geithner from his slumber in 2008 – and gave him his marching orders: turn AIG into a giant “slush fund”, so that the banksters could get 100% pay-outs in fleecing AIG on its CDS contracts. It was Geithner's ability to follow those orders (and funnel more than $10 billion directly into Goldman Sachs' coffers) which allowed him to inherit the job of Treasury Secretary from Goldman Sachs' former CEO: Hank “Bazooka” Paulson.

It was not only the confirmation of a full-fledged cover-up which warranted writing a sequel to my first commentary on this subject, but also the additional details of AIG's behavior during its self-induced crisis, and more information on the “toxic” assets which Goldman had duped AIG into insuring.

To begin with, according to testimony from AIG's former president of its “financial products”, James Cassano, in 2005 AIG consciously decided to stop underwriting CDS contracts for CDO's containing U.S. sub-prime mortgages. However, the CDO's which AIG underwrote after 2005 (mostly brought to them by Goldman Sachs) performed as badly or worse than the sub-prime CDO's which it insured prior to the end of 2005.

At this point even the 'dim bulbs' in the U.S. government and media began to light-up.