SIGTARP as released a new study report on AIG. The report found that the AIG 100% CDS payout was a grave mistake.

Guess whose mistake it was? Then New York Fed President Timothy Geithner.

For some background on this payouts, read The Real Screw Job: AIG used as a Funnel of U.S. Taxpayer money.

Here's the money quote from the SIGTARP report, right in the summary:

  1. The original terms of federal assistance to AIG, including the high interest rate it adopted from the private bank’s initial term sheet, inadequately addressed AIG’s long term liquidity concerns, thus requiring further Government support.

The Ostriches in the Sand - Regulation Hearings & Frameworks

The Obama administration is pre-announcing the regulatory reforms announcements (see their outline below), so much so one might miss what is coming out of Congressional hearings on the topic.

From the Systemic Risk and Insurance hearing, subcommittee chair Kanjorski said:

I believe that only ostriches can now deny the need for establishing a federal insurance resource center and a basic federal insurance regulatory structure.

Geither's response? Let's ignore the entire insurance industry. What's in a name? (AIG)

Geithner & Bernanke in Financial Services Committee Hearing

Folks, I must recommend turning off the pundits on TV, CNBC and even many of the blogs and tune into CSPAN.

Today in the House Financial Services Hearing, Oversight of the Federal Government’s Intervention at American International Group, U.S. Treasury Secretary Tim Geithner, Federal Reserve Chair Ben Bernanke, along with New York Fed Chair William Dudley testified.

The Big Pitch - Geithner's Sales Job

The headlines are ablaze of Geithner's plan.   The Treasury Secretary is on CNBC, the cable news, even conference calls with select bloggers (I wonder if Krugman was invited?), are they twittering too?   The markets react, the Dow up almost 500 pts!   Astounding, magical, we have the cure....or do we?

I already wrote my own overview of the toxic asset plan and believe it fatally flawed with the same assumptions that got us into this mess, home values must drop to be in alignment with income and Americans are tapped out, the great debt fueled Ponzi scheme has collapsed.