The Non-Event That Is AIG’s Counterparty List

Why is anyone surprised that AIG made substantial payments to large financial institutions? Wasn’t the entire purpose of bailing out AIG to prevent the collapse of the financial system? Such a purpose would imply that without a bailout, the financial system would collapse. Therefore, we should expect the result of any bailout made with that purpose to result in substantial payments into the financial system. Since large financial institutions are at the heart of the financial system, we should expect such a bailout to result in substantial payments to large financial institutions. Is the world so devoid of news that such a trifling and obvious result warrants extensive coverage?

Without the report, we could not have known exactly who had received funds. But, we could have used information that was already available and apply categorical logic (or common sense if you prefer) to infer what sector was on the receiving end, as I have demonstrated above. But then again, it appears logic, common sense, and facts have nothing to do with public policy or debate on this crisis. Rather, populist rage, childish blame, and jealousy are firmly in the lead.


Originally published at Derivative Dribble and reproduced here with the author’s permission.

3 Responses to "The Non-Event That Is AIG’s Counterparty List"

  1. Guest   March 20, 2009 at 4:21 pm

    You miss the point. All of the executives of the companies receiving largess from the AIG bailout get large BONUSES. These bonuses would likely not have occurred or been seriously scaled back without the AIG bailout. When executives can no longer profit from federal monies, the banks will stop fighting nationalization and real resolution to this crisis can begin.

  2. Anonymous   March 20, 2009 at 6:26 pm

    it was a non event, everybody’s distracted by the bonuses.

  3. chris davis   March 22, 2009 at 12:01 am

    Please, get Goldman Sachs clowns out of govt: Feds could have easily mandated a globalCDS ledger; called all players together; insisted on monumental margin increase or abrogation, eg, the Hunts & the silver market.Far be it for American authorities to execute a comprehensive and methodical rescue plan — tat appears to be too much to ask.