Speculation About Geithner's Role in AIG Bailout Heats Up Fri Jan 8, 2010
It’s unclear what exactly the fallout will be regarding troubling new details about Tim Geithner’s role in the AIG (AIG) bailout, but the New York Times attempts to process the information today. Geithner, who was president of the Federal Reserve Bank of New York, and thus administering the government bailout of the insurance giant, seemingly allowed his staff to tell AIG to gloss over or not disclose key pieces of information in SEC filings, about the level of support the firm was getting from the Fed. A Treasury spokeswoman told the paper Geither was recused from working on issues related to AIG by the date of the filing, but Geithner’s role in crafting the bailout is simply too instrumental to simply dismiss. Representatives of the Fed claim the changes were innocuous and did not cover up material information about the company, which, because it is publicly traded, it’s required to disclose. AIG wouldn’t comment, but Republican Congressman Darrell Issa, who requested the documents, promised to ask for inquiries into the matter, and to try to bring Geithner before the House oversight committee of which he’s ranking member. Jim Chanos has made a more than healthy living by betting on the downside of companies he believes have peaked, like Enron. The Times says his latest bet is not on a company, but a country he feels has nowhere to go but down: China. The paper details the ways—from cooked books to over-speculation, that Chanos feels China is due for a fall. “Dubai times 1,000” is how he described the country’s real estate sector. It’d be easy to dismiss such contrarian claims if Chanos weren’t almost always right about his bets. Yet his stance puts him at odds with Warren Buffett, Wilbur Ross, and dozens of other financiers who think China has nowhere to go but up. Chanos, as the article describes him, seems to relish the role of possibly shorting those bulls all the way down. The FDIC is considering a slap-your-forehead simple approach to regulating pay practices at banks, the Washington Post reports. Because banks pay fees into the federal fund that insures depositors against bank failures, the FDIC is considering offering discounts to companies that adopt common sense pay practices, like clawback provisions in cases where pay doesn’t match up with results. The idea is to reward executives for putting the health of the institution ahead of their own personal bank accounts. The idea remains in early stages, but seems to be a good fit for the FDIC, which already offers rebates and penalties to banks for a variety of other practices. Google (GOOG) wants to become an electricity marketer, but, really, it’s not what it sounds like. Essentially, the company wants to be able to buy wholesale electricity from power plants, preferably green ones, rather than go through middlemen on the market. Several large corporations already do this, but Google’s power centers suck down the juice like almost no other type of facility. Despite being extremely energy efficient, their sheer scale probably puts them beyond even typical data center power consumption, which is already quite high. The Wall Street Journal’s story also reports that Yahoo (YHOO), Microsoft (MSFT), and Intel have thought about getting into the energy market. The paper notes that though we probably won’t see “Google Watt” just yet—because the regulatory filing to is really just clearing ground for Google to service itself—Google does have a history of surprising the public with new ventures, even when it’s specifically disclaimed interest, as with the recent Google Nexus One phone. Bank of America (BAC) says the Journal, will likely hand out bonuses on 2007 levels, to try to stem defections, mostly by Merrill Lynch employees. Now that the bank has repayed its TARP funds, the sky’s the limit, or at least, whatever the board will approve is the limit. Commercial real estate in New York, “hasn’t hit bottom,” one broker told the Times today. That’s even with massive amounts of office space available in Manhattan, and dozens of buildings in trouble. That’s likely to spur lower rents, higher vacancies, huge bargaining power for those seeking space, and foreign investment or purchase of landmark buildings in the city. The twist will be that that stable buildings with easy titles will be the targets, whereas marginal properties with complicated ownership structures are likely to founder, even trailing any economic recovery. Finally, Anil Kumar, an associate of Galleon CEO Raj Rajaratnam, has pled guilty to feeding him information in exchange for $1.75 million in cash, which Rajaratnam used to earn about $19 million for his hedge funds. The plea includes Kumar’s cooperation in the widening case against Galleon. After reading this article, people also read:UPDATE 1-Tishman, NY Fed in talks on Chicago loans http://www.reuters.com/article/idUSBNG53527020091208?loomia_ow=t0:s0:a49:g43:r1:\ c1.000000:b29697294:z0 http://www.reuters.com/article/idUS309575000420100108--
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