AIG Bail Out Shows Fed's Favoritism, Patrikis, Willumstad and
Byline: Matthew Russell Lee of
Inner City Press: News Analysis
September 17 -- As the U.S. Federal
Reserve bails out another Wall Street conglomerate, this time AIG, the Fed's
favoritism is increasingly in question. Why AIG and Bear Stearns but
Brothers? On AIG, it's worth noting for example that former Federal
Bank of New York chief counsel Ernest Patrikis went through the
directly to a similar position at AIG, where he showed himself quite
call regulators, former colleagues, to get them to side with AIG on
protection and other issues.
was applying for approvals to buy American General,
along with its already
controversial subprime lending business, Patrikis and AIG convinced
to ignore applicable law about granting public hearings. Patrikis even
New York regulators and assured them AIG would meet with its critics,
Fair Finance Watch -- and in full disclosure Inner City Press -- after
was consummated. But AIG quickly returned to pure hardball, threatening
complaints against its critics if they continued to oppose it.
Willumstad, at right, with others who created chaos: Weill and his
connection is Robert Willumstad, formerly Citigroup's number two
official. Citigroup from its
beginnings has always been
a Fed favorite. The merger of Travelers Insurance and Citicorp, then
under the Glass Steagall Act, was secretly pre-approved by the Fed. The
meetings about the deal, belatedly disclosed in a series of letters
almost comically to the merger of "Red" and "Blue," arrived
at a two year grace period during which Citigroup could lobby to repeal
law. The AIG bail out also puts off the reckoning for two years. Much
lobbying can be done in that time.
Watch this site, and this (UN) debate.
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