Failed Insurer AIG Sues Bank of America

The failed mega-giant insurer AIG, now in government hands, has filed suit against Bank of America, bringing criminal charges that the bank, or its recently acquired divisions Countrywide and Merrrill Lynch, misled several of AIG’s “sophisticated investors” as they are described in the suit, concerning bundled mortgage instruments sold to AIG, and ripped them off.

Rare even on Wall Street is a corporate culture as malignant as that of AIG prior to 2008. If there is one financial entity that wasn’t worth saving it is this largest of all insurers, who couldn’t pay their claims. Though the government’s mission of covering AIG’s obligations to other financial entities was absolutely crucial – to keep the panic from spreading – and even though it required by far the biggest “investment” of all the toxic, garbage ridden bucket shops that teetered on collapse in 2008.

Goldman and everyone else knew those Credit Default Swaps were garbage when they bought them from AIG as insurance on their bundled mortgages, which they then “sold” (on a temporary basis) to private investors (like AIG) and state pension funds. AIG knew that the the Credit Default Swaps were garbage when they wrote them. And everybody knew there would be a mortgage meltdown: They had been talking about it on the internet since at least 2005. Real estate had gone up 50% in NY for ten years straight. And everyone knew the end was coming in September 2008 when the bundled mortgages (Collateralized Debt Obligations ((not to be confused with Credit Default Swaps)) rolled over, and, being “marked to market” suddenly became toxic garbage which the banks were forced to buy back at the agreed upon price, putting unsaleable assets on their balance sheets, and causing a run on their stock. This is a defect which Dodd-Frank did nothing to address: The instruments still have 6-month expiration dates and they all expire at the same time. (which generates plenty of underwriting and transaction fees for Goldman.)

But when these CDO’s came due in Sept. 2008… EVERYONE KNEW THEY WERE GARBAGE!


(CDO’s are good as a means of financing mortages though, and could be used to get a lot of people into their own homes with a little tinkering, if that’s what the the Elites want to do. Though wonder if CDS’s aren’t one step too distantly derived from anything to be of much practical use: It would seem better to take a calculated risk on the mortgages, especially if your a gigantic bank, than to try and rely on a – now notoriously unreliable – form of insurance.)

Now AIG – which is like 80% government owned – has the nerve to take Bank of America to court. Yet no one from AIG has gone to jail, while the result of their shenanigans prior to 2008 – the essential wrench in the works that threw the global financial system into a still-deepening tailspin – has served a very real death sentence on countless thousands.

On the other hand: No single private financial entity has done more for America than Bank of America: They bought the toxic garbage that was Countrywide Financial, ready to nurse it toward health, though it was largely gutted by the market reversal. They rescued our once preeminent brokerage Merrill Lynch – a national disgrace – with the government and Fed breathing down their necks and preassuring them to do it so THEY wouldn’t have to. True to shenanigan-prone form, Merrill Lynch wouldn’t come down on the price when their holdings tanked… and tanked again… and again… BECAUSE THEY CONSISTED LARGELY OF THE SAME TOXIC GARBAGE. And now Bank of America is accused of being – and because of the relentless propaganda, believed by many to be – made up of predatory corporate rapists: for seeking the merger that was practically forced upon them by the powers that be.

But Bank of America was the only big bank that had a clean balance sheet, EVEN AFTER THE TOXIC GARBAGE STARTED FALLING FROM THE SKY, in fact: till after they acquired Merrill and Countrywide. Bank of America was put together by Ken Lewis and a bunch of gentile bankers from Charlotte, though it was 51% owned by a bunch of Jews, notable among them a father and son team named Finger. From offering the first modern credit card, to mega-bank status under Lewis, Bank of America is probably the last great American business success story, as least for a while. It doesn’t help that the government forced them to take bailout funds when they didn’t need them just to make Lewis and the other goys look bad. And the weekly defamatory propaganda article in the New York Times, I’m sure, has had a telling effect on the “Intellegencia”.

And now the gigantic dissembler AIG, an anticipated proprietary revenue source for the NEW SOVIET ECONOMY, or lack thereof, has fired a shot across the bow.

Actually, we (that is the normal people, plebs) should be glad, because the crashing markets, brought on by a crisis of confidence which the possibility of a favorable judgment against BOA has caused – along with the expected copy-cat suits – might actually result in some relief in the form of… DEFLATION. Yes, deflation! That much to be dreaded and fought against economy-destroying dangerous demon deflation: Because, with DEFLATION: We might be able to buy an egg for less than $2.50. But the Elite’s inflated assets (Both their assets and our currency are inflated.) are denominated in dollars, and everyone knows that inflated dollars are worth more than regular ones. Likewise, inflated assets. Hence, DEFLATION IS EVIL. And we might see a touch of it before the inflation nonsense resumes.

But not for long. The inherent vapidity of the US economy after 30 years of “service sector expansion” – and corresponding contraction in any kind of concrete productivity that can be marketed to the world – will finally lead back to inflation. And the stock market will rise – as the dollar becomes worthless to the point where it will actually pay to start manufacturing in the United States again. (The stock market and the dollar have had an inverse relation for a while: When stocks are deflated the dollar is sound. When the dollar tanks, stocks reinflate.) See? The markets’ natural way of accounting for things always puts everything to right in the end! Maybe if we’re lucky we can get a job building hand-held devices for Chinese businessmen at Foxconn. (Don’t commit suicide.) Of course, by that time an egg will cost $5.00. And Foxconn’s switching to robots.

The only way to save ourselves now is for the government to force an orderly liquidation of AIG: Then we’d be rid of this preposterous lawsuit. I am certain some in the government know what to do but am also certain they’re not going to do it, because they want their money back on the AIG bailout. At least. OR… How does… Mother America’s Cradle-to-Grave Insurance Administration Company sound? Lets hope they’ll be able to cover claims this time!

Unfortunately, the government doesn’t have voting rights for the stock they own – it’s Preferred Class B or something, zillions worth of it. This after the 60-to-1 devaluation (in simultaneously devaluing dollars) beginning in 2008. What the government needs to do is just say they’ll dump the whole lot if they don’t get issued common stock, or something with voting rights. Wouldn’t that be fun? Then begin an orderly liquidation. Or dump, if need be. Of course you’d have to give Benmosche several billion.

AIG said the other day they’re going to reign in the secondary market for life insurance settlements – where you buy someone else’s policy and hope they’ll die soon. It’s all legal. The world of high finance is a CASINO where only THEY win. The Question is whether these “sophisticated investors” at AIG (or were they “highly sophististicated investors”?) knew they were getting ripped off when they bought bundled tranches of mortgages from Bank of America, or from Countrywide, or Merrill, as the case may be. It seems AIG’s highly sophisticated lawyers have had little difficulty in determining that these particular bundled tranches of mortages were…

Whadayaknow! TOXIC GARBAGE.

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