Who is profiting from the CDS fiasco?? Did anyone buy the AIG CDS, or any other CDS, not as insurance to cover losses in CDOs they own, but as investments, betting that the CDOs held by others would fail? If such people are out there, will we find out who they are? And, if we do find out who they are, will the public be outraged by such speculation or applaud such a smart investor as being the last man standing?
When I wrote this back in November, the public outcry over the Fed's support of AIG had not risen to its current level. Now that the Fed has pumped so much tax payer money into AIG, the equation has changed.
Large institutions who themselves have collected piles of Fed money, and who also have collected on the AIG bailout thru the backdoor (as AIG counterparties), are in the early stages of being vilified.
Hedge funds, on the other hand, that speculated on AIG (or other CDSs) and have not received Fed bailout dollars, are being applauded as smart investors.
With this as a background, last week the Fed's Vice Chairman Donald Kohn admitted to the Senate Banking Committee that Fed bailout money was paid out by AIG to other firms, but wouldn't say to which because the Fed fears that this disclosure would undermine 'public confidence'.
If Open Government is to mean something, the Fed will need to openly publish the list of firms. Not doing so because it might undermine public confidence, suggests that the Fed is out of touch with what's driving public confidence. Anyway, the WSJ has already published at least a partial list -- Goldman Sachs, Deutsche Bank, Merrill Lynch, Société Générale, Calyonl, Barclays, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, Lloyds Banking Group -- that as AIG counterparties indirectly reaped $50 Billion of bailout funds.
