Submitted to Operation Disclosure | Anonymously

To: US Taxpayer
Re: Federal Reserve Improperly Failed to Disclosure $60,000 Billion in AIG Bailout

The AIG bailout supposedly cost $182 billion and resulted in a profit of $18 billion for US taxpayers.

In fact, the AIG bailout may have cost $60,000,billion more than disclosed and this amount was intentionally withheld from disclosure by the Federal Reserve Board of New York.

Extraordinary assertions require extraordinary proof so I start with the evidence.

Magnitude of Undisclosed AIG Losses

The magnitude of losses not disclosed in the SEC filings are disclosed in AIG Bailout Oversight Hearing, Panel 1, Oct. 8, 2008. Eric Dinalo participated in the AIG bailout discussions as NY State Insurance Superintendent. Mr. Dinalo estimated the undisclosed AIG bailout amount (credit default swaps) at $60 trillion. Six other participants stated similar amounts: Maloney (57 trillion), Yarmuth (62 trillion), Turner (63 trillion), Braley (63 trillion), Welch (62 trillion), Sarbanes (62 trillion). The troubling nature of the “naked” credit default swaps is also set forth (“gambling”, no collateral, no ownership of underlying asset, no return value, no cap relative to asset).

Federal Reserve Intentionally Failed to Disclose the $60 Trillion in Losses

The $60,000 billion in losses was intentionally withheld from disclosure by the Federal Reserve Board of New York and the “extraordinary” withholding is detailed in US House of Representatives, Committee on Oversight and Government Reform, Public Disclosure as a Last Resort: How the Federal Reserve Fought to Cover Up the Details of the AIG Counterparties Bailout from the American People, Special Report, US House, January 25, 2010. When the SEC sought full disclosure as required by SEC rules the FRBNY responded that “This requirement is giving us some pause, since we haven’t otherwise disclosed this information to Congress.” The report states that the “FRBNY clearly hoped to prevent Congress from fully understanding the payments to AIG’s counterparties.” (pg 13).

The Committee concluded that the “fact that a quasi-government agency, unaccountable to the American people, likely wasted billions of taxpayer dollars and went to great lengths to prevent Congress and the American people from learning about these actions demonstrates the threat that the Federal Reserve poses to basic principles of American democracy.”

Further facts are found in the AIG shareholder suits vs. US in which AIG shareholders asserted unfair treatment in the bailout. These cases concluded earlier this year at the US Supreme Court. In those cases, plaintiff asserted that, at FRBNY’s insistence, the actual SEC filings did not include Schedule A to the Shortfall Agreement, which set forth information regarding the counterparties and payments funneled to those institutions (credit default swaps). Shortly after filing, the SEC noted the Schedule A omission and told AIG that under agency rules, it must include the schedule for public disclosure or request confidential treatment. In response, AIG, in consultation with FRBNY, filed a confidential treatment request with SEC to conceal from the public the information in Schedule A which the SEC granted.

The request for confidential treatment was improper since the information was not confidential. The magnitude of the losses is publicly disclosed before the SEC filings in the Oversight Hearing (above).

Requesting confidential treatment for information in the Congressional record before the filing was submitted is clearly improper. The information was not confidential and did not deserve such treatment.

Audit of Federal Reserve Reveals Trillion in Losses

The magnitude of the losses is confirmed in the (virtually unreported) first ever audit of the Federal Reserve. The audit suggests 16,000 billion had already been delivered to domestic and foreign banks. GAO, Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance, GAO-11-696. Table 8 (page 131), 2011. In assessing the GAO audit, the Levy Institute estimated the amount to be $29 trillion (Levy Institute, Working Paper No. 698, December 2011, $29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient).

The Federal Reserve claims the entire bailout for all recipients was just $1.3 trillion.

Federal Reserve Claims Profit

Press Release (newyorkfed.org)
August 23, 2012
“Today’s announcement on ML III follows the successful wind-down of Maiden Lane II LLC (ML II) in February 2012, which resulted in a net gain of approximately $2.8 billion for the taxpayer. It also follows the January 2011 termination of the New York Fed’s extension of credit to AIG, which produced approximately $8.2 billion in interest and fees. When taken together, the total net profit to taxpayers from the New York Fed’s assistance to AIG and AIG-related facilities was $17.7 billion.”

The media widely reported this alleged a “profit” and the US Treasury Dept. issued a similar finding.

Federal Reserve and US Treasury Dept; Mr. Tim Geithner meet Mr. Tim Geithner

The Federal Reserve Board of New York (FRBNY) and US Treasury both ignored their duty to inform the US taxpayer of the massive “secret” AIG bailout and served the interest of the central bankers instead.

The president of the FRBNY was Tim Geithner when the terms of the AIG bailout were “negotiated” in November, 2008. Later that same month (Nov. 24, 2008), Obama appointed Tim Geithner as US Treasury Secretary.

Mr. Geithner seemingly served the interests of the Federal Reserve as FRBNY President and as Treasury Secretary.

Tim Geithner wrote a book detailing his heroic efforts in saving the economy. Seriously?

Summary

The $182 billion bailout of AIG supposedly produced a profit of $18 billion. It appears that the AIG bailout may have cost $59,982 billion instead and this amount was improperly withheld and misrepresented by the Federal Reserve and the Treasury Department.

“A nation can survive its fools and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly. But the traitor moves amongst those within the gate freely, his sly whispers rustling through all alleys, heard in the very halls of government itself. For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to fear.” Cisero

Regards,
Jens Hoekendijk