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Blog Post
7/1/2010
Posted by Consumer Watchdog
A big focus of the hearings today will be on the Collateral Call Disputes between AIG and Goldman in the run-up to the crisis. In other words, why did Goldman mark down (price) AIG's Credit Default Swaps so much lower than other peers, coercing AIG into coming up with collateral they didn't have? How did GS lead to AIG's downfall, and thus, AIG's...
Blog Post
7/1/2010
Posted by Consumer Watchdog
Today I will be liveblogging Day 2 of the FCIC's hearings. Witnesses are giving their opening statements now. Set to testify in Session 1 (with links to their statements): Steven J. Bensinger Former Executive Vice President and Chief Financial Officer American International Group, Inc. Testimony (PDF) Video --> Andrew Forster Former Senior...
Blog Post
6/30/2010
Posted by Consumer Watchdog
Unlike the previous session with AIG's Cassano, this session with Gary Cohn, President of Goldman Sachs, and Craig Broderick, head of credit, market and operational risk, has been particularly dull. The Commissioners have wasted a valuable opportunity to ask more probing questions and discover anything of substance. On questions concerning Goldman...
News Release
6/30/2010
Posted by Consumer Watchdog
Consumer Watchdog Says Average 15% Rate Could Still be Excessive Under Proposed ‘Prior Review’ Rate Regulations Santa Monica, CA -- Anthem Blue Cross of California, under fire for substantial math errors in its proposed health premium increases averaging 25%, has made the minimum possible reduction in reissuing its proposed increases,...
Blog Post
6/30/2010
Posted by Consumer Watchdog
My wireless had been knocked out for several hours, so apologies for the blackout. We are about an hour and a half into Session 3 with Goldman, but before discussing what is going on now I'll briefly discuss the AIG session. Cassano, former head of AIG's Financial Products division, was in charge of creating the financial instruments that...
Blog Post
6/30/2010
Posted by Consumer Watchdog
Representatives from AIG are asserting good faith and denying that credit default swaps (CDSs) or over-the-counter derivatives were ever sold without due diligence or with lower underwriting standards. Cassano especially is maintaining that the financial instruments are performing well now under vehicles operated by the federal government. Phil...
Blog Post
6/30/2010
Posted by Consumer Watchdog
The session with the "experts" is over. It is not entirely clear if the Commission learned anything new, especially considering the disparate views held by each of the panelists. In a telling series of answers, one member asked each of the panelists to rank the causes of the financial crisis. Two said over the counter derivatives were...
Blog Post
6/30/2010
Posted by Consumer Watchdog
A quick interaction between members of the FCIC as they questioned their first panel of academics on derivatives this morning foreshadows the quagmire commissioners are delving into as they question AIG and Goldman Sachs executives this afternoon, concerning the derivatives deals that ultimately found AIG using taxpayer bailout funds to pay...
Blog Post
6/30/2010
Posted by Consumer Watchdog
So far, the questioning has been abstract, about the nature of derivatives and their inherent risk in the market. The Commission is trying to get a better understanding of these financial instruments. While nothing especially controversial has been said so far, the answers from the witnesses seem informed and have depth. It will be interesting to...
Blog Post
6/30/2010
Posted by Consumer Watchdog
While opening statements wrap up from our four witnesses, only one witness seems to be defending the stance that over the counter derivatives played "no role" in exacerbating the crisis: Steve Kohlhagen. As questioning starts soon, it will be interesting to see him elaborate on his position.