Fed Demanded Security Laws Shield AIG

Matt Taibbi reports on an insane, probably illegal practice

(NEWSER) - Police aren’t generally in the habit of destroying evidence from failed investigations—but the SEC is, according to one whistleblower. SEC attorney Darcy Flynn spilled the beans to Congress in July, saying that the SEC routinely destroys all documents related to its preliminary investigations if they don’t proceed. That appears to violate federal law, writes Matt Taibbi in a lengthy piece in Rolling Stone , making it “far more than an administrative accident or bureaucratic fuck-up. It's a symptom of the agency's terminal brain damage.” More»

Geithner, Paulson face grilling over 'backdoor bailouts' for AIG clients

(NEWSER) - Two Federal Reserve governors expressed their unease about the Fed's rejection of a plan to force big banks to return $30 billion in cash they received from AIG before its bailout in late 2008. The officials warned that the decision to let the banks, including Goldman Sachs, keep the collateral they paid AIG on credit insurance contracts might be "a gift" to the firms, according to documents obtained by the New York Times. More»

Markets recover after last week's bloodbath

(NEWSER) - Stocks posted gains today as some investors bought up bargains in the wake of last week's big losses—but volume was light as most remained cautious ahead of the State of the Union address, a hearing on AIG's bailout, and a Fed interest-rate decision, the Wall Street Journal reports.

• The Dow rose 23.88 points to close at 10,196.86.
• The Nasdaq added 5.51, settling at 2,210.80.
• The S&P 500 gained 5.02, closing at 1,096.78.

Agency routinely grants waivers for harshest punishments

(NEWSER) - Financial giants accused of swindling investors have been successfully dodging the SEC's harshest penalties by arguing that the law shouldn't apply to them. Firms including Citigroup, Bank of America, and AIG have recently sought and received waivers from regulations requiring lawbreakers to close their mutual fund businesses. Waivers have been granted to repeat regulation offenders and even firms that lied on their waiver application forms, a McClatchy investigation finds. More»

He's accused of handing AIG creditors 'backdoor bailout'

(NEWSER) - Tim Geithner did a lousy job of looking out for the interests of taxpayers during the AIG bailout last year, according to a report from a federal oversight group. Geithner, then head of the Federal Reserve Bank of New York, made no attempt to renegotiate AIG's debts, effectively giving the insurer's creditors a "backdoor bailout," the report found. More»