From Volume 8, Issue 13 of EIR Online, Published Mar. 31, 2009

United States News Digest

Cuomo Subpoenas AIG Swap Data

March 26 (EIRNS)—New York Attorney General Andrew Cuomo today subpoenaed AIG's credit default swap contracts, as part of an expanded investigation to see if AIG customers Goldman Sachs, Société Générale, and Deutsche Bank, among others, were improperly compensated with U.S. taxpayer dollars. "Our investigation into corporate bonuses has led us to an investigation of the credit default swap (CDS) contracts at AIG. CDS contracts were at the heart of AIG's meltdown last September. The question is whether the contracts are being wound down properly and efficiently, or whether they have become a vehicle for funneling billions in taxpayer dollars to capitalize banks all over the world."

Yesterday, 27 Congressmen, led by Elijah Cummings (D-Md.), sent a letter to Neil Barofsky, inspector general for the Troubled Asset Relief Program (TARP), calling for a Federal probe into whether banks, including Goldman Sachs, received more funds than necessary from the AIG bailout. According to, a person familiar with Cuomo's investigation pointed out that while Lehman Brothers' counterparties got a few cents on the dollar, AIG's payouts appear to have been 100 cents on the dollar. Cuomo is looking into the negotiations that led to the winding down of the contracts. The person said there's a possibility that AIG is becoming a portal through which the Federal government is pouring in money to capitalize banks in the U.S. and overseas.

Former New York State Attorney General Eliot Spitzer has called for an investigation of the relationship between AIG and Goldman Sachs. Edward Liddy, the new CEO of AIG, was on the board of directors of Goldman Sachs for five years, and headed up its audit committee. When questioned whether there had been any concern about a potential conflict of interest in appointing Liddy, Treasury Secretary Timothy Geithner told Congress this week that the nomination did not originate at the New York Fed, which he headed at the time. The others involved in the decision to bail out AIG reportedly included former Treasury Secretary Henry Paulson, previously CEO of Goldman Sachs; Fed Chairman Ben Bernanke; and the current CEO of Goldman Sachs, Lloyd Blankfein.

Freeman Rips Sterility of Ideas In Washington

March 24 (EIRNS)—Amb. Chas Freeman, in a letter excerpted in the Capitol Hill newspaper The Hill today, struck out at the "self-destructive behavior in political Washington, [where] self-appointed thought police assure that there is severely narrowed space for the discussion ... of issues of great importance to the nation." The pattern of "viewing intelligence not as a resource for decision making, but as raw material for polemics," may have started with the Bush Administration, he rote, but it is now "endemic in both parties."

Freeman was forced to withdraw his name from nomination to serve as the head the National Intelligence Council, based on spurious charges by an indicted Israeli spy, Steve Rosen, a "former" top official of the right-wing Israeli lobby group AIPAC (American Israel Public Affairs Committee). In his letter to The Hill, Freeman was responding to a slanderous piece in the Washington Post last week, by Rep. Frank Wolf (R-Va.), who argued that Freeman's downfall was of his own making, and tried to implicate Freeman as complicit in the crisis both in Darfur and in Tibet. Freeman charged that Wolf had "repeated verbatim the bill of particulars drawn up and shopped around the blogosphere and Congress by a group of lobbyists with a narrow and very particular agenda."

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