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U.S. bailout watchdog Neil Barofsky has announced today that he's opening two new investigations into the NY Federal Reserve-AIG-Goldman Sachs' bailout mess: "U.S. bailout watchdog probes NY Fed on AIG disclosure." That's in addition to three others of which we're already aware.

Just when you thought you'd seen it all, it becomes apparent that things are about to get a lot uglier for the home team in the MSM. The Fed-AIG-Goldman scandal is a big problem that's getting bigger for the White House by the day, whether the folks at 1600 Pennsylvania Avenue acknowledge it or not.  

I'm not going to say a whole hell of a lot today, because I've already written just about everything there is to write about it; and for almost 17 months, too. (See below.) The MSM has a layup here for the rightwing blood and guts crowd; and Neil Barofsky's drawing that blood now; and, it ain't pretty. Everyone loves a trainwreck. (And, this one's been playing out in slow motion for well over a year.)

The administration's lost control of a narrative that was theirs to own. As Nate Silver warned us, it didn't have to be this way; but it is. Matters are taking on a life of their own as far as this story's concerned. These are just truths. It's time to deal with them.

From Reuters: "U.S. bailout watchdog probes NY Fed on AIG disclosure"


U.S. bailout watchdog probes NY Fed on AIG disclosure
Tue Jan 26, 6:59 am ET

WASHINGTON (Reuters) - A U.S. bailout watchdog has launched two new investigations into the New York Federal Reserve Bank's actions on insurer AIG's (AIG.N) disclosure of payments to banks after its 2008 rescue, excerpts of prepared congressional testimony showed on Monday.

Neil Barofsky, the special inspector general of the Treasury's $700 billion Troubled Asset Relief Program, said he would launch a probe into whether there was any misconduct relating to public disclosure of the $62.1 billion paid to retire credit default swaps with banks.

Barofsky announced the investigation in excerpts of prepared testimony to the U.S. House of Representatives Oversight and Government Reform Committee. The excerpts were obtained by Reuters.

From the story we learn that Barofsky, Geithner, Paulson and Thomas Baxter, the NY Fed's general counsel, and others will be testifying before Congressman Edolphus Towns' Financial Services Oversight and Investigations Subcommittee on Wednesday.

We're now being told that Barofsky will be launching a second probe into "...the New York Fed's level of cooperation with a prior audit conducted by his office into the AIG payments to U.S. and foreign-owned banks."

Apparently, this all follows the recent email disclosures between the Fed and AIG lawyers which clearly demonstrate pressure from the NY Fed, while Geithner was running the show in 2008, to "...suppress information about the payments..." to AIG.


The payments for securities from a Fed rescue vehicle called Maiden Lane III have been labeled a "back-door bailout" for Goldman Sachs (GS.N), Societe Generale (SOGN.PA), Deutsche Bank (DBKGn.DE) and other big global banks.

This story is clearly gaining momentum which indicates, IMHO, to me that we've crossed a tipping point whereby the administration is going to have to circle their wagons and do intensive damage control, up to and including separating itself from a massive media liability relating to a story that they no longer control--at least enough to the point where they may participate in the direction of said narrative.

If there's any doubt as to the accuracy of my observations, please consider these additional pieces running in the MSM and in the blogosphere over just the past few hours:

BBC:  "AIG bail-out investigations launched."

Forbes: "AIG: What's The Fed Hiding?"

Business Day: "Geithner in AIG bail-out drama as e-mail from colleague made public"

Zero Hedge: "Should Davis Polk Join Tim Geithner In Providing AIG Testimony Before Congress?"

Faux News: "Fed's AIG Secrecy Investigated"

#            #            #

For more background on all of this, here are some of my posts on the matter, along with a couple of links to pieces by the NY Times' Gretchen Morgenson regarding same:

2010--

Reuters: SEC Considered AIG Bailout National Security Matter (1/25/10)

Naked Capitalism Guest Post: AIG Bailout Secrets Exposed! (1/23/10)

Breaking (Update): Fed Denies House Subpoena For AIG Docs (1/12/10)

2009--

3 Fraud Probes Target Goldman, AIG: Is It "The" Story of 2010? (12/28/09)

"The AIG-Wall St. Bailout Corruption Story That Won't Go Away" (12/23/09)

"Breaking WSJ: Massive Goldman-AIG Bailout Conflict Of Interest" (12/12/09)

"New Economic Travesties: GDP Revision, Goldman/AIG, Reform" (11/24/09)

"Goldman's Eviscerated In NYT; Admits Geithner's 'AIGenerosity' (11/22/09)

Gretchen Morgenson, over at the NY Times: Revisiting a Fed Waltz With A.I.G." (11/22/09)

"Fed'l Reserve, IG Barofsky: Paulson, Treasury Lied To Public" (10/6/09)

One of Gretchen Morgenson's (NYT) best pieces of the entire recession: "Member and Overseer of the Finance Club" (4/27/09)

"Is it the largest betrayal of public trust in history?" (3/15/09)

"Doesn't Geithner's Middle Finger Look Just Like Paulson's?" (3/12/09)

"Wall St. Bailout: Is A Massive Scandal About To Unfold?" (3/8/09)

"On Geithner, NYT Leak and TARP II Drama: Kuttner Nails It" (2/13/09)

2008--

"Fed Refuses to Name Recipients of $2 Trillion Bailout" (11/10/08)

"Paulson/Fed Gives O.K. To Banks To Steal Your Money! (For real!)" (9/16/08)

"BREAKING: NY Times, 'AIG joins Merrill and Lehman in Wall Street Collapse'" (9/15/08)

 

Originally posted to http://www.dailykos.com/user/bobswern on Tue Jan 26, 2010 at 10:53 AM PST.

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