According to the unnamed, our future is in their hands

Submitted by Lee Batdorff on Thu, 03/19/2009 - 14:12.

Who imploded the economy? Many critics point to a crucial role played by traders of exotic unregulated financial instruments which are understood by few people. Currently most of these traders at American Insurance Group remain unnamed while receiving bonuses for “safely” dismantling an investment system turned doomsday machine which happens to hold the fate of the world’s financial system.

A congressional hearing on Wednesday March 18, 2009, shown on C-Span, featured questions from congress people of Mr. Edward Liddy, the current AIG chief executive officer. Mr. Liddy, former CEO of Allstate Insurance, was hired to replace Robert B.  Willumstad as CEO of AIG in September 2008. Working for $1 a year to help bail out AIG (and the U.S. taxpayer) Liddy told the congress members that something like 20-25 people at AIG know the credit default business well enough to “wind down this book of business.”

The deregulation of the financial industries (mixing of insurance, banking and unregulated investments) made it possible for a small group of people to design a system that only they understand. Modern financial derivatives were introduced in the 1970s and deregulation of the financial system in the 1980s and 1990s was a boon for trade in these instruments. This unregulated system grew to control the investment distribution of a large percentage of the world’s wealth, all outside the purview of civil society.

When Mr. Liddy was asked for names of the people in the AIG’s Financial Products division who were responsible for the implosion of this business, he gave only one name which is already publicly known. This is Gerry Pasciucco, head of AIG Financial Products (credit default swaps and derivatives businesses). While a congressman implored Liddy to name some of the other traders, he refused. During his testimony Liddy admitted that no one in AIG's executive management knew enough about what the Financial Products division was doing to do a company audit of this enterprise which was dealing in trillions of dollars in investment.

If you are interested in seeing a photograph of Mr. Pasciucco who apparently has helped bankrupt the world financial system, and now is partly responsible for dismantling the derivatives system that did this, you can find one of him sporting a stunning outfit at a philanthropic event held on June 6th 2008 in Connecticut on this Web page: http://www.fairfieldcountylook.com/gallery.php?id=7

Type “Pasciucco” in your browser’s find box and up pops a photo taken of him with his wife and another couple. He is wearing a blue tux jacket over a Che Guevara T-Shirt. In his wildest dreams, the 1950s South American Communist Guerilla probably never imagined imploding the Capitalist economy as has happened in 2008 and continuing into 2009.

While Mr. Guevara worked with guns, Mr. Pasciucco, and his unnamed crew, probably work with a type of video game that runs their system of derivative contracts. While guns pose apparent serious threat, video games are harmless, aren’t they?

According to a March 18th story in the New York Times Mr. Liddy is said to have recently asked the undisclosed people of AIG Financial Products division to take only half of the total multimillion dollar bonus offered. This may not suite all of us. Representative Barney Frank of Massachusetts threatened to issue subpoenas, if necessary, to make public the names of the AIG bonus recipients.

On March 18th a congresswoman asked Liddy, “Don’t these people have a sense of morality or patriotism?” On the morning of March 19th, there was a report on National Public Radio that the unnamed traders fear for their lives because of threats to kill them and their families have been made by angry taxpayers.

It was also reported that some of these traders have returned the bonuses they received. After all, they amassed fortunes over decades getting us into this fix. Hopefully they’ll accept a $1 dollar contract, as Mr. Liddy has, and help dismantle the doomsday machine.

 

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A shred of morality?

 

Good to see you writing here again Lee Batdorf.  Here's the picture you describe in your post above:

Scorn trails AIG Executives - NYT 3/19/2009

"Scorn Trails A.I.G. Executives, Even in Their Driveways," New York Times, March 19, 2009.

From the article:
Pasciucco was not working for AIG when the above pix was taken.

"Gerry Pasciucco, a former vice chairman of Morgan Stanley who was brought in by Mr. Liddy in November to wind down the financial products unit..." The article doesn't say what "bonus" Pasciucco is getting paid and if he was also involved in making damaging plays in the unregulated financial world during his time at Morgan Stanley. Perhaps Pasciucco is doing it for a $1, like Mr. Liddy.

According to the Times story the largest bonus of $6.4 million, went to Douglas L. Poling. Poling returned the money, “because he thought it was the correct thing to do.”

One could surmise that he can easily return that kind of dough because he probably made several fortunes before this final $6.5 mil check was cut. He earned these fortunes operating a system that finally went over the edge in 2008. It could take a lot of Congressional hearings to sort this out. Both Pasciucco and Poling are noted in their towns for philanthropy. Now private security guards protect the homes of the AIG bonus receivers because their neighbors, including people who've lost their jobs, know where they live.

 

Biggest bankers committed fraud?

William K. Black, author of THE BEST WAY TO ROB A BANK IS TO OWN ONE (about the savings a loan crisis of the early 1990s), discussing todays world's most powerful bankers:

http://www.pbs.org/moyers/journal/04032009/profile.html

Good to see your byline, Lee

Thanks Lee, for alerting me to this Moyer's interview which I missed. I've seen it now and appreciate the guest's view.

Kunstler had this to say:

 President Obama will have to starkly change his current game plan if this outcome is to be avoided. I think he's capable of turning off the mob -- of preventing the grasshoppers from turning into ravening locusts -- but it may take an extraordinary exercise in authority to do it, such as the true (not pretend) nationalization of the big banks, engineering the exit of Ben Bernanke from the Federal Reserve, sucking up the ignominy of having to replace failed regulator Tim Geithner in the Treasury Department, and calling out the dogs on the swindlers who had the gall to play their country for a sucker.
     As I've averred more than a few times in this space before, the standard of living in America has got to come way down. We mortgaged our future and the future has now begun. Tough noogies for us. But the broad public won't accept the reality of this as long as the grandees of finance and their myrmidons appear to still enjoy the high life. They've got to be brought down hard, perhaps even disgraced and humiliated in the courts, and certainly parted from some of their fortunes -- if only in lawyer's fees. Mr. Obama pretty much served notice to this effect last week, telling a delegation of bankers in the White House that he was the only thing standing between them and "the pitchforks." It's possible he understands the situation.

When will the adminsitration wake up?