Courtesy of Pam Martens.
The Special Inspector General for the Troubled Asset Relief Program (SIG-TARP) which provides oversight of the TARP bailout program put in place during the financial crisis of 2008, released a report this week on AIG. The report indicated that AIG still has no Federal regulator and that “PricewaterhouseCoopers has been AIG’s auditor for decades and continues to serve in that role.”
To appreciate the significance of the above sentence, a little background is in order. In May 2005, AIG restated five years of financial statements, shaving $3.9 billion off its previously reported profit for those years and reducing its book value by $2.7 billion. AIG had a derivatives unit called AIG Financial Products which, by 2008, had issued $400 billion in credit default swaps, mostly to Wall Street banks, which it did not have the financial wherewithal to cover. In 2008, first through the Federal Reserve Bank of New York and later through TARP’s Systemically Significant Failing Institutions (SSFI) program, the U.S. taxpayer bailed out AIG to the tune of $161 billion. Of that amount, $27.1 billion was paid to the big banks to get them to rip up AIG’s credit default swaps.
Now I ask you – is it time for a new auditor?
On Wednesday, July 25, 2012, PricewaterhouseCoopers’ name emerged again on Capitol Hill. Gary Gensler, Chair of the Commodity Futures Trading Commission (CFTC), revealed in his testimony before the House Agriculture Committee that in 2000, PricewaterhouseCoopers had been assigned to look into matters at Peregrine Financial, recently discovered to be running a Ponzi operation with $200 million in customer funds missing.
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