2008 Financial Crisis – WishList

  • 2006 04 – AIG – Peter Adamczyk, Securities Lending -A Growing Investment Strategy, AIG Global Investment Group – (describing AIG’s securities lending business); – <WishList>
  • 2007 0410 – AIG – Credit Risk Committee Minutes (CRC) – <WishList>
  • 2007 0925 – AIG – Credit Risk Committee Minutes (CRC) – <WishList>
  • 2008 1003 – NYT – A.I.G. Uses $61 Billion of Fed Loan – [link]
    • AIG Press Release – <WishList>
  • 2009 –  Case 1:11-cv-00779-TCW Document 258-1 Filed 08/06/14 – 26p
    • 183 – FRB018-00408344 to FRB018-00408345 – Letter – (2/27/2009 12:35 pm) – From: Roger Sevigny (NAIC) – To: Thomas Baxter – re: Meeting between NAIC and FRBNY – <WishList> – Page 18 of 26

2008 Financial Crisis – Index

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Neil Barofsky

  • 2000-2008 – Assistant United States Attorney for the Southern District of New York
  • 2008-2011 03 – SIGTARP, the Special United States Treasury Department Inspector General overseeing the Troubled Assets Relief Program (TARP)
  • 2012 – Book – Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, by Neil Barofsky

Gretchen Morgenson

  • 1997 04-05-06 – Forbes – 2002p – dn790009.ca.archive.org/0/items/forbes159aprforb/forbes159aprforb.pdf
    • 1997 0407 – Forbes
      • Cover –  Index Funds – Riskier Than You Think
      • p90-96 – What the Sales Brochure Didn’t Tell You. Stock index funds: taking a closer look S&P 500 index funds are all the rage. Are they as safe as you think. Can there be too much of a good thing? Better read on., By Gretchen Morgenson 
  • 2008 0618 – NYT – MBIA Debt is Setting Up Standoff with Regulators, By Gretchen Morgenson and Vikas Bajaj – [link]
    • The risks associated with the vast, unregulated market for credit default swaps played a crucial role in the bailout of Bear Stearns.
    • Now these financial instruments are taking center stage in another Wall Street drama: whether regulators will let MBIA, the big bond insurance company, renege on a promise to shore up a crucial unit with $900 million in capital.
  • 2008 0809 – NYT – Naked Came the Speculators, By Gretchen Morgenson – [link]
    • Still, Mr. Dinallo said, the valuations of C.D.S.’s remain absurdly optimistic on both the books of the bond insurers who wrote them and the companies who bought them.
      • As regulator in this particular poker game, he gets to see both parties’ hands.

Massachusetts Mutual - Tremont

  • 2011 0728 - NYT - Settlement of More Than $1 Billion From Madoff-Related Funds, By Reuters - [link]
    • Mr. Picard has said Tremont, based in Rye, N.Y., which is part of the Massachusetts Mutual Life Insurance Company, was the second-largest "feeder fund" group that funneled money to Mr. Madoff from its own investors.
    • He sued Tremont for $2.1 billion on Feb. 28, accusing it of missing "red flags" and "blindly relying on Mr. Madoff to drive their funds' returns" for nearly 15 years.
  • State Law Securities Cases
  • In re Tremont Group Holdings, Inc. Securities Litigation, No. 09 Civ. 03137 (S.D.N.Y.).
  • Motley Rice represents an individual investor in consolidated litigation regarding investments made in Bernard L. Madoff Investment Securities, LLC, through a variable universal life insurance policy.
  • 2009 - AP - Enablers of Exuberance: Legal Acts and Omissions that Facilitated the Global Financial Crisis, by Jennifer S. Taub - 69p-ssrn.com-link
    • Another sophisticated investor was Tremont Holdings, Inc.
      • Tremont is part of the Oppenheimer Funds unit of Massachusetts Mutual Life Insurance Co.
      • Tremont lost over $3 billion in client assets after acting as a major―feeder‖ to Bernard L. Madoff Investment  Securities ponzi scheme.
    • Apparently, at least half of Tremont's assets were invested (via assorted feeder funds) with Madoff.
    • Tremont attempted to refund money to clients by liquidating other assets, however it was blocked by many ―gates‖ and other restrictions on withdrawals from both private equity and hedge fund positions.505
    • Clients have sued, claiming that Tremont should have known about the fraud.
      • Tremont has denied the allegations.
        • It stands to reason, then that if Tremont is liable, then it failed in its responsibilities as a sophisticated investor.
        • If Tremont is not liable, then, it shows that sophisticated investors are incapable of monitoring
  • 2011 - LC - YALE M. FISHMAN 1998 INSURANCE TRUST v. AGL LIFE ASSURANCE COMPANY, TREMONT GROUP HOLDING, MASSACHUSETTS MUTUAL LIFE INSURANCE CO - 2011113_o01n_11CV00211 - "Universal Life Insurance" - [Doc 1-64p - <Bad Link>]
    • UNITED STATES DISTRICT COURT - EASTERN DISTRICT OF NEW YORK - Case 2:11-cv-00211-JFB -AR 
    • Supreme Court of the State of New York, County of Nassau - Index No. 601094/20 10

2008 0627 – MG – Bloomberg – AIG to Absorb $5 Billion Loss on Securities Lending: Insurance Units Wrote Down $13B Tied To Mortgages, by Miles Weiss

  • 2008 0627 – MG – Bloomberg – AIG to Absorb $5 Billion Loss on Securities Lending: Insurance Units Wrote Down $13B Tied To Mortgages, by Miles Weiss  —  [BonkNote]

2008 0628, Sat National Post (Toronto, Ontario, Canada) Newspapers.com

Scott Alvarez

  • Mark MCWATTERS, COP Member – Okay. Mr. Alvarez, Mr. Baxter, in the view of the Federal Reserve Bank, in the view of the Federal Reserve Bank of New York, is AIG today a solvent entity?
  • Scott ALVAREZ, FRB – General Counsel, Federal Reserve Board.  – So AIG does not have negative net worth. It has a positive cash capital. It is meeting the demand for loans as they come due.
  • Mark MCWATTERS, COP Member – Okay.
  • Scott ALVAREZ, FRB. So it does meet the traditional definition of solvency. It is repaying the Federal Reserve from the liquidation of assets in the Maiden Lane II and III facilities and also from the sale of its companies to repay the revolving line of credit. (p90)

2010 0526 – COP – Hearing – TARP and Other Government Assistance for AIG, Congressional Oversight Panel  —  [BonkNote]

Alan Grayson

  • 2010 0319 – businessinsider – Check Out Alan Grayson’s Furious Letter To The AIG Trustees, by Gus Lubin – [link]
    • Date-? – Letter – Alan Grayson (D-FL) to AIG Credit Facility Trust Trustees – 2p
  • 2009 0506 – Alan Grayson – Alan Grayson: Is Anyone Minding the Store at the Federal Reserve? – [VIDEO-YouTube-05:26]
  • 2009 0319 – GOV (House) – Regulation versus Chaos: Rep. Alan Grayson on What Really Happened at AIG  —  [VIDEO-YouTube-04:40]
    • AIG 10k – 
    • Securities Lending Counterparties
  • New York Insurance Commissioner Eric Dinallo and Pennsylvania Insurance Commissioner Joel Ario came before your committee and swore state regulation actually worked, and that, whatever its trading losses in London and New York, AIG’s insurance companies weren’t stripped, they’re still solvent.
    • “The 10-K disagrees with them. It’s not that hard. They’re all crooks.”

2009 0327 – The Philadelphia Inquirer – Congressman wants AIG leaders jailed, Rep. Alan Grayson (D-FL) – [link]

  • (p38) – Alan Grayson (D-FL) – Let’s assume, for the sake of argument, that we agree that something went badly wrong in the case of AIG, and that bailing out AIG was not the best use of $100 billion of taxpayer funds.
    • ⇒  Somewhere along the line, somebody should have had the authority and the guts to say to AIG, you are doing something wrong. You need to stop. 
  • And what I want to hear from you all is I would like to hear your best ideas about what the substantive rules should be in order to avoid a recurrence of the situation that we have had with AIG. And I am talking about specific limits because I am concerned that if we simply say to a systemic risk regulator, you figure it out, that is not being responsible.
  • …
  • What are your best ideas about when to tell AIG or any other insurance company that enough is enough?

2009 0514 – GOV (House) – How Should the Federal Government Oversee Insurance?, Paul Kanjorski (D-PA)  —  [BonkNote]

Orderly Resolution Authority

  • AIG’s problems “highlight the need for a resolution authority with the power to manage the orderly restructuring of a large, complex, non-bank financial institution that poses a threat to the stability of our financial system,” Geithner said.

2009 0324 – ThinkAdvisor – Geithner To Ask For More Powers, By Arthur D. Postal – [link] 

  • (p7) – Joseph TORTI, NAIC, Deputy Director and Superintendent of Insurance and Banking, Rhode Island Department of Business Regulation:
    • I hope I understand your question. Are you saying as a result of the Dodd-Frank changes that have been made, what would be done differently?
  • Al GREEN (D-TX) – How would the States respond to the FDIC handling exigent circumstances comparable to AIG during the financial crisis?
  • Mr. TORTI. The traditional way that we would handle that type of thing is we try to create a wall around the insurance entity to protect the insurance entity and the insurance entity’s policyholders from those circumstances so that the insurance policyholders and claimants aren’t made to pay for the problems outside the insurance entity.
    • That is normally the way that we protect an insurance entity in a receivership situation.
    • So if there were a holding company issue or a significant affiliate outside of the insurance entity that had financial difficulties, we would protect the insurer from those financial difficulties through the current receivership laws that we have in all the States.
  • Mr. GREEN. In essence, are you saying that you would be able to work within the confines of Dodd-Frank and with the FDIC so as to perfect an orderly liquidation?
  • Mr. TORTI. We really hope we don’t end up in that situation again.
  • Mr. GREEN. Obviously, yes, I concur.
  • Mr. TORTI. But, yes, we believe we should be able to work with the FDIC.
    • We are hopeful that we will be able to work with the FDIC.
    • We have a very good relationship with the FDIC.
    • The FDIC has acknowledged that protection of the policyholders and claimants of the insurance entity is of utmost importance to us, and we believe that we should be able to work with them on that type of circumstance.
  • Mr. GREEN. Are there any technical changes to the draft we have that you would recommend to help to facilitate this?
  • Mr. TORTI. I can’t think of any technical changes that I would offer to the current draft that you have, no.

2011 1116 – GOV (House) – Insurance Oversight and Legislative Proposals, Judy Biggert (R-IL) – [PDF-131p – VIDEO-?]

2009 0402 – GOV (House) – The Collapse and Federal Rescue of AIG, and What it Means for the U.S., Hank Greenberg – AIG – Edolphus Towns (D-NY)

  • 2009 0402 – GOV (House) – The Collapse and Federal Rescue of AIG, and What it Means for the U.S., Hank Greenberg – AIG – Edolphus Towns (D-NY)  —  [BonkNote]
  • Hank Greenberg, Former AIG CEO
  • (p14) – One, wall off AIG Financial Products from the rest of the company and replace as many loans as possible with guarantees.  
  • (p14) – AIG’s business model did not fail, its management did.  
  • (p25) – When they lost the triple A rating after I left the company, that should have been a signal to discontinue writing credit default swaps and hedge the book, because, by their own admission, in their 10-K filings they said that they would be required to put up more collateral.
    • So they knew that, they disclosed that. And having done that, you would have thought that somebody, whether the  president, CEO or the chairman, should have called a halt and said, until we regain a triple A rating, we’re either going to slow down materially or discontinue, because if you have to put up more
      collateral, you got a problem.  
  • (p25) – AIG did not have a solvency problem, it had a liquidity problem.  
  • (p28) – First of all, Mr. Cummings, as far as I know, there are no losses whatever on the credit default swap. That was reported to the Senate Banking Committee last month by the head of the Thrift Administration.
    • It wasn’t losses that brought AIG down, AIG Financial Products, it was a lack of collateral that they had to put up. And the reason they needed more collateral was because they lost their triple A rating. 
  • (p28) – No. 2, because we were triple-A-rated, we did not have to put up collateral. So when AIG lost their triple A rating, and they wrote as much in 9 months as we wrote in 7 years, at a lower-quality business with multisector CDOs, that became a different book of business.  
  • (p63-64) – Bill FOSTER – (D-IL).
    • I have a couple of questions on your securities lending business, which I take it was responsible for a significant fraction of the difficulties.
    • And first off, who owned the securities that were being loaned, which business entity?
  • Mr. GREENBERG. Probably the life companies.
  • Mr. FOSTER. The life companies, OK. And so now, and now, who was actually performing the loaning and making the decisions?
  • Mr. GREENBERG. I think that was done by Win Neuger, the head of investments.
  • Mr. FOSTER. So this was done individually for each one of the life business units.
  • Mr. GREENBERG. I think he was the overall head of investments. And who was carrying out that day to day on his instructions, I can’t tell you. I’m not there.
  • Mr. FOSTER. I’m trying to understand if these were sort of tunnelling through the ring fence that was supposedly around–
  • Mr. GREENBERG. Normally what happens in security lending, an insurance company, a life company, has a huge amount of assets that’s been invested, securities.
    • A lot of banks and investment banks want to borrow them, say, for 30 days.
    • And they give you cash.
    • And you normally invest the cash in short-term receivables that will earn you 3 to 5 or 6 basis points.
    • Somebody got exuberant and were investing in for 30 base points, as I understand it, and a lot of it had toxic subprime assets involved.
    • And so when the banks wanted back their cash, AIG couldn’t sell the securities at that amount to cover that. And the Fed set up–
  • Mr. FOSTER. Could you explain why this wasn’t picked up by the individual insurance regulators?
  • Mr. GREENBERG. I don’t know. I wasn’t there.
  • Mr. FOSTER. So this you would view as a failure of the individual insurance regulator, the fact that this was allowed to occur?
  • Mr. GREENBERG. I would say that’s probably right, unless the amount involved was not considered by the regulator to be of such amount as to impair the solvency of the company.