Hoffa shows Geithner how to run things

Memo to Treasury Secretary im Geithner: If you want to survive another year in Washington, start channeling your inner Jimmy Hoffa. Yes, Hoffa James P. Hoffa, that is -- the current Teamsters boss and the one man who has stared down Goldman Sachs and the big-money crowd on Wall Street and come out a winner. While our Treasury Secretary has been busy covering the friendly tracks he laid as NY Fed Chief, in recent weeks Hoffa has showed Lloyd Blankfein and Co. who's boss -- and did so without even breaking a sweat. The Hoffa v. Wall Street battle began back in December and received little notice, but taxpayers should pay attention to the kind of deal that can be cut when a tough cookie like Hoffa is driving the negotiations. The dispute centered around YRC, parent company of the Yellow and Roadway fleets, the nation's biggest trucker and employer of 30,000 of Hoffa's union brothers. Loaded with debt, and saddled with a CEO who spent more time on CNBC in recent years than Jim Cramer, YRC was headed for a year-end rendezvous with bankruptcy unless it could convince most of its bondholders to swap their debt for stock. That's a tricky proposition under any circumstances, but YRC had another obstacle to face. Hundreds of millions of dollars worth of credit-default insurance on YRC debt would pay off if the company went bust, giving bondholders an incentive to see the company go Chapter 11. Hoffa understood this and decided to play hardball -- he accused Goldman, Deutsche Bank and a handful of hedge funds of trafficking in YRC's credit default insurance and raised the prospect of his 18-wheelers parked all the way from Park Avenue to Broad Street in protest. He also turned up the political heat with union-connected lawmakers in Washington. In the end, the bullying worked like magic and by Jan. 1, fully 88 percent of bondholders agree to participate in the exchange. Bankruptcy was averted, and Goldman Sachs was eventually praised for helping YRC get "over the goal line" by buying up YRC debt in the marketplace in order to exchange the paper for stock. A triumphant Hoffa called it his "first foray into high finance." Unfortunately, Hoffa looks to have a brighter future in that area than the man who currently commands the US Treasury Department. Compare the YRC drama with the slowly evolving tale of Geithner's role in the 2008 back-door bailout of Goldman Sachs and its subsequent cover-up. You'll see why taxpayers sense something is very wrong about this story, and rightly so. As we're now learning by the day, Goldman nearly bankrupted AIG in the fall of 2008 -- much as YRC's credit default holders almost bankrupt that company last month. The key difference is that in AIG's case, the taxpayer was left holding the bag, while Goldman and AIG live to trade another day. But it gets worse. Not only did AIG pay off those contracts to Goldman and a dozen other banks to the tune of 100 cents on the dollar -- or a remarkable $62 billion -- Geithner's NY Fed insisted AIG cross out any reference to the full price of the payout. As e-mails released by Congress last week show, the idea was to keep the public in the dark. The final cost to taxpayers from the AIG rescue -- $182 billion, or about half of the entire US defense budget. Imagine the bargain Hoffa would have driven home for US taxpayers had he been representing our interests the way he did that of his union brethren. Fifty cents on the dollar? You better believe that would have been at least his starting point. And why not? Those who profited from the government bailout of AIG, led principally by Goldman Sachs, obviously think that the alphabet soup of derivatives were spun in such a fine web that no mere mortal could never grasp what was really going on. But the public is not so naive. Jimmy Hoffa, Jr. understood this and rode to the rescue of his constituents. It's too bad Geithner didn't do the same for his constituents, the US taxpayers.
terrykeenan@email.com

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You guys will not understand what is really going on here until you understand that the tarp loans to GS were just a red herring, a distraction. The real game is AIG, and all the money we pumped in that direction. Which then went to GS, and other firms. The PR people at GS tell us GS had the risk of AIG fallure hedged, but they should be made to prove that those counterparties would have paid 100 cents on the dollar. That is very doubtful, So the 12 or 13 billion GS got from AIG came directly from the taxpayers.
Second, GS has become a government sponsored entity, knowing they can walk into the financial casino, place their bets, and if they lose, the tax payer will cover them. How can the fail to make money?
Third, GS played a major role in creating the commodities supply panic of 2008, convincing everyone that they should pay $150 for oil today, so they don't have to pay $200 tomorrow.
But I doubt if anything will happen, because GS and the other Wall Street big financials are so tight with the financial press, there will never be good investigative journalism on this. Ask a financial reporter if he has any personal friends who work on Wall Street, and they will all say yes. Ask most New York and Washington based reporters in general if they have friends who work on Wall Street. Chuck Todd of NBC admitted as much several months ago, saying that "all of us have social friends on Wall Street, maybe if we all knew some autoworkers, we would look at each set of bailouts differently."
Then throw in the fact that Barney Frank is good friends with Henry Paulson....
Remember, Galleon is just the tip of the iceberg.
Justin, please find out where the AIG money went, and make them prove their other hedge counterparties could pay up. Because we also bailed them out.

randymiller

9

You know, these guys would be living in a different universe if so many members of the financial press weren't wearing clown shoes.
I quote Justin's coworker, after describing how Andrew Hall has his unit rent a tanker and take delivery of 1 million barrels of oil because he thought the price was temporarily low.
"When the price of oil recovered Hall made as much as $40 million on that one trade alone. "
Excuse me, but he would have had to make over $42 per barrel to both cover his costs and make $40 per barrell. I find that very improbable.
Does this idiot reporter know this to be the case? If so, he doesn't provide any evidence. Instead, he gushes on:
"Hall has also reportedly been buying gold this year. Another good move...."
But not a particularly innovative one, particularly when you are playing risk-free with other people's money backed by the government.
I don't have any problem with the idea that individuals can be worth a lot of money. I can name three whose companies I have dealt with and where the company's success clearly bears their imprint:
1. Bill Gates
2. John Chambers
3. Steve Jobs
Maybe Andrew Hall is one of these folks. Or maybe he's just a guy who engages in highly leveraged, high risk transactions with other people's money. Who knows?
What I can tell you definitely is that nobody will be able to make that determination more accurately because they read this idiot article in time.
http://www.time.com/time/business/article/0,8599,1930732,00.html
Small wonder that America's discussion of this issue approaches the overtly moronic.

tc125231

October 19, 2009

at 3:13 pm

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I just read in a news articles that AIG's executives slated for another round of mind-numbing bonuses were pointing to laws as reasons why the bonuses could not be interfered with by legislators or regulators. OK - suppose one agrees with them. I find such executives' as well as many other executives' throughout the financial industry respect for law admirable. I find their selective respect for law despicable--and it has also proven to be demonstrably hazardous to the health of the country.

Inevitably legislators and regulators will back off because they do not want to be seen as trifling with laws. What's puzzling to me however is why these legislators and regulators recognizing that such bonuses are outrageous and also corrosive of the financial and social system do not utilize other relevant laws which would be effective in controlling heedless and in many cases criminal executive behavior.

Executives in the financial sector who were oblivious to laws in amassing their fortunes now try to rely on laws to protect these fortunes and also to increase them. There are laws against fraud, unfair trade practices, and other germane matters. As the executives loudly now call for respect for the law, the legislators and regulators play along with them--while both groups concertedly look away from other laws. Thus the charade of the equitable application of the law goes on.


Read more at: http://www.huffingtonpost.com/robert-l-borosage/will-we-curb-wall-streets_b_320549.html

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Dear Congressman,

As a newly unwitting part-owner of AIG and one of your constituents down here in Florida, I ask that you and the other members of congress block AIG from paying out $100 (or more) in bonuses to their employees, many of whom got us into this financial mess in the first place. The fact that they don’t think that they have to answer to the people that now own 80% of their failing business is a joke.

If I did a really horrible job at my work (which, at the moment isn’t possible, because I was laid off, which is what should happen to many at AIG) and lost my company and the companies that we deal with gigantic quantities of money, I wouldn’t get a bonus (of amounts up to a reported $6.5mil, no less), I’d be fired and out on my ass, and rightly so.

I’ve had to work hard to stomach the fact that we keep bailing out all of these financial giants that nearly brought down our entire economy instead of spending that money on new infrastructure and new businesses that could do a better job. We’re pumping blood into a corpse and hoping that it comes back to life. The best we can hope for with this tack is Frankenstein’s monster, not a healthy banking system. I find it appalling that the companies that we’ve bailed out have been held to virtually no standards of accountability and have been so sanctimonious when asked.

The rest of us, the hard-working everypeople of this country are just supposed to accept that as “the way things are.” That is, excuse my language, a fucking joke. How are we supposed to value hard work and competence when our government is rewarding the exact opposite? So, I ask for you to at least raise the issue. I understand that you are just one member of a large body of representatives, but having one voice standing up and saying “No” is how change gets started. Thank you for your time, Congressman.

State lawmakers who howl about wasteful spending by local governments should have put the brakes on the abuse-ridden Deferred Option Retirement Program years ago.


But they let it ride, including during the January special session when they chopped education and trust funds for children’s health.



That’s called protecting their own.