In addition to watching the video below this column from The Market Ticker Guy (Karl Denninger) is a must read. Some snippets...
Consider that we have had a group of people on Wall Street who were selling various security products that it is alleged they knew were worthless:
We have Goldman Sachs which has been accused in the media on multiple occasions of selling various subprime mortgage securities to clients while shorting them through other divisions of the firm; if this is a not a declaration of knowledge (or belief) that they're worth less than they were being sold for (if not "worthless" outright) I don't know what is.
Now let's talk about Elizabeth Warren's grilling of Tim Geithner yesterday in Congressional Oversight Panel hearings; you can watch the entire thing on http://CSPAN.ORG
The key item here is this: Ms. Warren grilled Tim Geithner about the payments to AIG to "prevent default" but nowhere does she, or anyone else, ask how it is that the NY Fed and US Federal Reserve, both of which regulate these institutions, came to allow banks under their umbrella to enter into transactions with a firm - in this case AIG - that had no money to make good on its transasctions IN THE FIRST PLACE.
Is it not fraud to sell someone something that you can't possibly, on the pure mathematics, deliver on? I think so and there are rumors that there is now a grand jury looking into the matter.
Leave the grand jury aside for a moment: The Federal Reserve and Treasury's various "arms", including the FDIC, OTS and OCC, all had regulatory oversight over some part of these firm's dealings with AIG. For the investment banks the link was more limited than it was with traditional bank holding companies, but post Bear Stearns when investment banks were given access to the discount window The NY Fed and The Federal Reserve formally had supervisory access and control over these firms sufficient to discover and force an unwind of these transactions. Yet they did not, and remember, Geithner was in charge of The NY Fed at the time.
All this and Bank Failure Friday again today costing another $1.7 Billion and remember the FDIC is nearly broke! So how safe is your money really?