If you don't know who Joe Nocera is, he writes the Talking Business column for the New York Times (I act all smug for knowing that, but it's only because I just saw him on The Daily Show). If you want to get really angry, read his article Propping Up a House of Cards. It explains how AIG managed to chalk up the largest quarterly loss in history (possibly around $60 billion dollars) while playing hopscotch through legal loopholes and selling unregulated "credit-default swaps", which are some kind of complicated made-up things that act like insurance on securities. Banks could buy these things to transfer their risk of loss back to AIG and make it look like all their subprime-mortgage-backed securities weren't so risky, after all. Which was great, except that AIG didn't have the collateral to back up the insurance. Are you following this? They were selling fake insurance on derivatives of derivatives. Thanks for your oversight, SEC! It's like an insurance company, but without the insurance part of it! As Nocera points out, another word for this is "scam." Now the federal government has been throwing money at AIG like crazy in an attempt to forestall the end of Western civilization as we know it (well, the banking part of it, anyway).
Mr. Nocera asked a former AIG executive if he thought they were guilty of "gaming the system". The executive replied that they were just trying to satisfy their customers. Uh huh. If by "satisfy the customers" he meant "Completely fuck a whole bunch of different people due to unadulterated yet short-sighted greed." Why would they want to take responsibility for this, just because it's their fault?
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment