It was damn good theater. The Republican members of Congress's Joint Finance Committee had U.S. Treasury Secretary Tim Geithner on the carpet and were trying to pull the rug out from under him. They blamed him for the American International Group bailout, for giving away too much to AIG's bank...

It was damn good theater. The Republican members of Congress's Joint Finance Committee had U.S. Treasury Secretary Tim Geithner on the carpet and were trying to pull the rug out from under him. They blamed him for the American International Group bailout, for giving away too much to AIG's bank...

You'll never recover from your biggest losses.

By Krista Hughes and Edward TaylorFRANKFURT (Reuters) - Banks risk becoming addicted to cheap central bank cash used to fight the financial crisis and must prepare for its eventual withdrawal, the head of the ECB warned at a Frankfurt banking conference on Friday.Financiers from the head of Deutsche Bank DBKGn...

According to the Wall Street Journal, Citigroup (NYSE: C) has a letter of intent to sell the 400-room St. Regis Monarch Beach in Dana Point, California, to an unidentified foreign investor for approximately $250 million. The deal includes the buyer assuming the property’s $230 million mortgage and paying Citigroup $20 million. The amount paid is much less than what Citi lent.

St. Regis came into trouble last September when media and politicians focused on plans by AIG (NYSE: AIG) to host a $440,000 retreat there. Since then the U.S. resort industry was plagued by the recession, costing many resorts, group bookings from skittish corporate clients. The occupancy this year at St. Regis was as low as 15%.

As everyone knows by now, Neil Barofsky, special inspector general for TARP, has a new report out on the decision by the Federal Reserve Bank of New York last Fall to make various AIG counterparties (primarily some very big banks with names you know) whole on the the CDS protection they had bought from AIG to cover their risk on some CDOs. The potentially juicy bit has to do with the Maiden Lane III transaction (New York Fed summary here).[More...]

There is a scene in the movie “Animal House” (which completely rips off Dr. Suess’ “Horton Hears a Who” in one fell swoop but that’s a story for a different day) where a small group is at Professor Riegert’s house and after the room fills with a certain scent the discussion gets a bit heady and the concept that our entire universe could be on the head of a pin in another, larger, universe is proposed. Grand stuff for sure but in the good professor’s case merely an attempt to raise Pinto’s awareness of a world outside of his own “Private Idaho”.[More...]

Prices of Treasury coupon securities are registering, on balance, modest changes in overseas trading. The massive wall of liquidity sloshing through the market has driven short rates lower while the longer maturities are unchanged.[More...]

Treasury Secretary Tim (Turbo Tax) Geithner has come under a lot of fire in recent months, and with just cause I might add. Today Tim Geithner came under heavy fire on Capital Hill for his failed policies, bailouts, and the growing deficit. The pivotal moment for me was when Tim Geithner said the following: {I do not [...]

Felix Salmon seconds Paul Krugman’s contention that the AIG bailout and bank bailouts in general have confused and soured the populace on any further stimulus bill. I think that’s just part of the burr under the saddle of the electorate.[More...]

Stacy Summary:  Witness the casino model in the Goldman Sachs / Buffett ‘charitable’ donation . . . you plough $23 trillion into the house slot machine and out comes $500 million in ‘free ‘drinks. U.S. housing starts unexpectedly plunge in October Goldman Sachs bankrupted AIG, played starring role in near collapse of global markets Goldman Sachs & Warren [...]

Stacy Summary:  And, of course, Goldman’s undisclosed role will not be examined by Congress or one of the commissions designed to investigate how this ‘mysterious’ financial collapse happened. Goldman’s Undisclosed Role in AIG’s Distress [PDF] Goldman questioned PriceWaterhouse, Goldman’s and AIG’s common auditor, about prices. Goldman wanted lower prices, which meant that AIG would have to produce more collateral.   When AIG was downgraded in September 2008, AIG was required to put up an aggregate amount  of $14.5 billion in additional collateral to equal the full difference between original prices and market prices.  But “market prices” in this illiquid market were influenced by Goldman Sachs. Goldman was right to question the prices, make calls for collateral, and protect itself. Goldman’s activity was not the same as that of an arsonist buying fire insurance, but its trading activities with AIG and others were accelerants of AIG’s problems.

Schaeffer's analyst Morgan Searcy takes a look at news on the Street before the market open.

Stacy Summary:   More forensic examination of Goldman Sachs’ role during the days that its former Chief Executive, Hank Paulson, was bailing out the financial players. Goldman Sachs:  Reasonable Doubt (Janet Tavakoli) Sophisticated counterparties like AIG are supposed to protect themselves, and have little chance for recovering damages.  But now the American taxpayer has stepped in to make [...]

Stacy Summary: Are you surprised?  Negotiating privately with the banks? Fed authorized 100% AIG payouts on CDS Beginning late in the week of Nov. 3, the New York Fed, led by President Timothy Geithner, took over negotiations with the banks from AIG, together with the Treasury Department and Chairman Ben S. Bernanke’s Federal Reserve. Geithner’s team circulated [...]