The banks have been paid after all as have massive bonuses for the very AIG employees that dragged the company down. All this with bailout money!
After all of the hullabaloo, AIG paid $93 billion, more than half of what it has received in bailout cash, to Goldman Sachs Group Inc and a host of European banks. The money went to banks to cover their losses on complex mortgage investments, as well as for collateral needed for other transactions. This is in addition to its plan to pay $165 million in employees bonuses funded by bailout dollars.
The Obama administration is incensed and I do not blame them one bit. The entire bailout scenario has been a hotly contested nightmare right from the outset. Wall Street and the banks are considered to be Public Enemy Number 1. Yet, Goldman, the most politically connected of all Wall Street banks and others including Deutsche Bank, Societe Generale and Barclays, all made out good with the funds channelled to them via AIG (Reuters).
At this point is more than 80% owned by U.S. taxpayers. Here’s where their dollars went:
- Goldman Sachs received $12.9 billion
- France’s Societe Generale received $11.9 billion
- Germany’s Deutsche Bank received $11.8 billion
- Britain’s Barclays PLC received $8.5 billion
- Merrill Lynch received $6.8 billion
- Other banks including Citigroup Inc., Switzerland’s UBS AG and Morgan Stanley received between $1 billion and $3 billion from AIG’s securities lending unit
So much for the banking industry lying low!
Was the AIG rescue actually necessary?
AIG was bailed out because it was much too large too fall. U.S. Federal Reserve Chairman Ben Bernanke said in an interview with CBS news magazine “60 Minutes” that the failure of AIG would have brought down the financial system.
The Obama administration is under pressure to show that the rescue plan for AIG and major banks is working to free up lending and rein in the riskier excesses of Wall Street. But is it fair that taxpayer dollars have been used to fund the very injustices that have brought the system down?