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April 08, 2009

Comments

williambanzai7

This is where Cuomo should be hunting.

eric

I know RP!! It looks like something the Lyndon LaRouche guys hand out on the street!

RPB

Jesus H. Christ! This sounds like something those guys who pass out communist newspapers would say! And this, out of the IRA? Holy sh*t Batman!

.

"The position of the Fed and Treasury reveals a level of ignorance that is truly staggering."

I don't think anyone is staggered by anything these assclowns do these days.

"AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks."

AIG was no ponzi scheme, but reinsurance scams are nothing new for all involved:

"Coral Re, a Barbados reinsurance company, was launched with a private sale of shares organized by Goldman Sachs, then headed by Robert Rubin, who would become President Clinton's Treasury Secretary and is now chairman of the executive committee of Citigroup. A confidential memorandum, (which Goldman Sachs ordered investors not to copy and to return on demand) told why the company was formed. "AIG's interest in creating the Company is to create a reinsurance facility which will permit its U.S. companies to write more U.S. premiums. For a U.S.-domiciled company, a high level of surplus is required to support insurance premiums in accordance with U.S. statutory requirements. The statutory requirements in Barbados are less restrictive."

A no-risk deal was offered by Goldman Sachs to selected investors who lent their names and credibility in exchange for guaranteed return of $25,125 in the first year and $45,225 each subsequent year. They were L. Donald Horne, chairman of Mennen Company; Charles Locke, chairman of Morton Thiokol; Kenneth Pontikes, former chairman of Comdisco; David Reynolds, chairman of Reynolds Metals; John Richman, former chairman of Kraft; and Samuel Zell, chairman of Itel Corporation. They didn’t have to put up any money: they got financing from Sanwa Bank of Chicago secured by the Coral Re shares, a guarantee of enough dividends from Coral Re to cover the interest, and agreement they could hand off the shares and debt whenever they chose.

Rubin buddy Bill Clinton, then governor of Arkansas, may also have thrown his weight behind the project. The Arkansas Finance and Development Authority (ADFA), headed by a man who went to work in the Clinton White House, became lead investor, although state law banned it from buying stocks.

The new company was not a legitimately independent business. For investors, there was no money at risk; the board of directors never made a decision; and Coral Re had no office of its own but was managed by American International Management, a subsidiary of none other than AIG.

Eventually, the scheme unraveled. State insurance examiners look at company books every five years. "In 1992, Delaware examiners auditing Lexington [an AIG subsidiary] smelled a rat," a former regulator from one of the four investigating insurance departments told CorpWatch.

AIG initially refused to provide Coral Re documents to the examiners, and it took them a couple of years to nail the connection. When AIG finally supplied Coral Re's financial papers, the regulator was incredulous. He said, "The books were definitely cooked. I remember three years in a row [in the early 90s] their pretax income came out to an even number. It was like somebody said 'show $250,000 pretax income.' I've been looking at financials for 35 years and have never seen pretax numbers come out even." The figures were 1987 $1.1 million; 1988 $1.555 million; 1989 $0.8 million."

(from http://www.corpwatch.org/article.php?id=11657)

"Several observers believe that at some point in the 2002-2004 period, Cassano and his colleagues at AIG began to realize that state insurance regulators and the FBI were on to the reinsurance/side letter scam."

State insurance commissioners are a joke. They look the other way on insurance scams so they can get rewarded with a cushy job at the insurance company after their tour of duty. They rationalize it by saying no one gets hurt. That's almost true because only one group gets hurt - the only group that the commissioner has a mandate to represent - the policyholders.

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