The Daily Grind Video

I, like many, dwelled on the notion that Wall Street not only retained the culprits of the Financial Collapse but also defended the need to award such bloodsuckers. John and Jane Doe in Middle America were filled with indignation. Capitol Hill and top officials of the Obama administration were just ‘outraged’. The CEO’s of AIG and the top banks had the audacity to argue that it has to pay bonuses because, if they lose their best employees, it would be harder for the company to recover and help the government recoup its investment. ‘These are our best and the brightest!’ And everyone from politicians to journalists to talking heads and satirist voiced their disapproving anger at not only the bonuses, but at the proposition that these fuck ups are defined as the ‘best and brightest’. Well guess what America, they are. And we either have the dumbest government to date, the blindest government, or the smartest government that is aiding in robbing tax payers blind while pinning blame elsewhere and watching us go at like a dog fight at Michael Vicks.

The nation’s six largest banks shelled out over $140 billion for executive compensation last year. That isn’t a large scale back from the $164 billion they paid themselves in the pre-crash year of 2007. What about the record profits posted last year and in the first quarter of this year from bailout recipients? They obviously aren’t selling or refinancing houses. And based on the tumbleweeds floating through former factory town, America isn’t and hasn’t really been making or manufacturing anything to boost the economy. How did these ‘best and brightest’ go from brink of bankruptcy homeless-hand-out baggers to record profits makers almost overnight. I’ve only heard of Lotto winner being able to pull that off.


Well, these geniuses made profits in a few ways. They made money selling crap mortgages, and they made money by collecting on the sham insurance from AIG when the crap mortgages flopped. At the peak of the housing boom Goldman and the other big banks were selling billions in bundled mortgage-backed securities- garbage home loans of the no-money down, no-identification-needed type, all illegal immigrants need apply- to various sucker insurance companies but mainly AIG. With deregulation in the last 20 or so years, AIG wasn’t actually required to have the capital to pay off those deals. As a result banks were able to buy nearly a trillion in bogus insurance from AIG. The trick for the banks now became how they collect the insurance money. As AIG headed under in the summer of 2008 due to the initiation of the housing bubble collapse, it looked like the troubled firm wasn’t going to have the money to pay off the bogus insurance. Goldman and others came around with its collection plates and demanded cash collateral. In the 15 months leading up to the collapse of AIG, Goldman alone, received $5.9 billion in collateral. These collateral demand payouts squeezed AIG from all sides and were what ultimately crashed the firm. Normally when a company is about to go up in flames, it isn’t suppose to hand out huge chunks of assets to a single creditor like Goldman. ‘Any bankruptcy court that saw those collateral payments would have declined that transaction as a fraudulent conveyance,’ says Barry Ritholtz, the author of Bailout Nation. The left-over assets are supposed to be distributed equitably to all its creditors. Had AIG gone bankrupt, Goldman would not only have lost much of the 5.9 billion, but not seen a cent of the additional 12.9 billion it was owed. Lucky for Goldman Sachs and the other big banks the government has their back. 100%. The US government, strong-armed by the