Friday, March 27, 2009
Let me begin by saying I’m a huge fan of New York AG Andrew Cuomo. I believe New York Gov. David Paterson made a grave political miscalculation by not appointing Cuomo to Hillary Clinton’s vacated senate seat. But the voters will get a chance to clean this problem up in 2010.
So, the news Thursday that Andrew Cuomo was widening his investigation of the American International Group (AIG) to examine whether its trading counterparties improperly received billions of dollars in government money came as no surprise. Cuomo is the very definition of a populist and I expect nothing else from him.
The counterparties under Cuomo’s microscope include Goldman Sachs, who received $12.9 billion, as well as Société Générale of France and Deutsche Bank of Germany, which receiving nearly $12 billion.
“Our investigation into corporate bonuses has led us to an investigation of the credit default swap contracts at A.I.G.. CDS contracts were at the heart of A.I.G.’s meltdown. The question is whether the contracts are being wound down properly and efficiently or whether they have become a vehicle for funneling billions in taxpayers dollars to capitalize banks all over the world.”
Other counterparties who received money from A.I.G. include Barclay’s Bank ($8.5 billion), Merril Lynch($6.8 billion), Bank of America ($5.2 billion), UBS ($5 billion), Citigroup (2.3 billion) and Wachovia ($1.5 billion).
While Andrew Cuomo deserves kudos for taking on some of the biggest, most powerful and influence players in the financial world, isn’t this really the job of President Obama’s financial and legal team? Namely, Treasury Secretary Tim Geithner, National Economic Council Larry Summers and Attorney General Eric Holder? However, in the last analysis, the onus of bringing accountability to AIG and its counterparties rests with Geithner, who once again has shown he would rather remain safely escounced in the shadows of the White House while a state attorney general performs the heavy lifting.