A must View: McClatchy's Greg Gordon speaks on AIG (Geithner and Paulson not looking so bright)

By Greg Gordon
McClatchy Newspapers

WASHINGTON — At the peak of the 2008 financial crisis, then-Treasury Secretary Henry Paulson and top Federal Reserve officials told the nation that there was an urgent need for the government to lend $85 billion to the American International Group so the giant insurer's temporary cash squeeze wouldn't trigger global financial chaos.

Nearly two years later, taxpayers are on the hook for twice that amount, and it now appears that Paulson and senior Federal Reserve officials either plunged ahead without understanding AIG's financial situation and the risks it posed to taxpayers — or were less than candid about one of the largest corporate bailouts in U.S. history.

AIG reported combined total losses of $110 billion in 2008 and 2009, erasing any doubt that the government stepped into a colossal mess.

AIG was at the epicenter of all the government bailouts of financial institutions in 2008, a company through which more than $90 billion in federal money flowed out the back door to some of the same Wall Street banks whose risky behavior fueled the crisis. Among the leading beneficiaries of the AIG bailout was investment banking giant Goldman Sachs, which Paulson headed until June 2006.


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Grandpa's #1 genie wish for 2010 remains to see Geithner and Bernanke gone however odds are Geithner will hit the pavement prior to Bernanke. Both are as "non-grandchildren friendly" as they come...