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Wall street firm, banks and AIG employees all make out good with bailout dollars. Obama administration is incensed.

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?

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Does The Bank Bailout Spell Socialism? Why Won’t Geithner Let

Written by Reenita Malhotra

Reenita Malhotra Hora is an Ayurveda clinician, entrepreneur, writer and mom. Her experience has ranged from running Ayoma, an Ayurveda business to running a natural health practice at San Francisco's California Pacific Medical Center.

Reenita is a published author of two books books about health and wellness: ‘Ayurveda - the Natural Medicine of India’ and
‘Inner Beauty’. She is also the Editor for Green Options Media's business blogs and a freelance writer for a variety of print and web publications.

In quieter moments, she likes to spend her time hiking, swimming the warm seas, cooking with the family or writing fantasy fiction adventure stories for kids from from 2 to 92.

Check out her wisdom at www.reenita.com

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