House Proceeding 03-19-09 on Mar 19th, 2009 :: 1:02:40 to 1:05:55
Total video length: 2 hours 53 minutes Stream Tools: Stream Overview | Edit Time

Note: MetaVid video transcripts may contain inaccuracies, help us build a more perfect archive

Views:67 Duration: 0:03:15 Discussion

Previous speech:

Next speech:

1:02:36 to 1:02:56( Edit History Discussion )

Alan Grayson: a.i.g.'s largest credit exposure, 160% of its shareholder equity, is to money center banks and global bank groups. in other words, wall street. almost half of that amount is owed to only five banks. but the real a.i.g. losses have come not from derivatives, but

1:02:40 to 1:05:55( Edit History Discussion )
Speech By: Alan Grayson

1:02:57 to 1:03:19( Edit History Discussion )

Alan Grayson: rather from a.i.g.'s basic business model. in a news release last monday, a.i.g. said it had to make payouts of $43.7 billion because of securities lending counter parties. there's the phrase. securities lending counter parties. the news release doesn't explain

1:03:20 to 1:03:42( Edit History Discussion )

Alan Grayson: what that ss, is, but a.i.g.'s 10k does. the standard business model is as follows. you make money from minimizing claim payments and make more money from investments. it's a stable, steady business. indeed, a.i.g.'s insurance

1:03:43 to 1:04:04( Edit History Discussion )

Alan Grayson: a.i.g. invested them, and a.i.g. paid out on claims. that's when things went horribly wrong. according to a.i.g.'s 10k, a.i.g.'s parent company sucked the investment assets out of its subsidiaries and lent them to wall street and foreign banks in return for cash.

1:04:05 to 1:04:25( Edit History Discussion )

Alan Grayson: and invested it, are you ready for this? in mortgage-backed securities. it's not an a. -- it's not on a.i.g.'s 10k, but its friends on wall street took the stocks and bonds borrowed from a.i.g. and sold them short. that's why institutions buy

1:04:26 to 1:04:46( Edit History Discussion )

Alan Grayson: securities to sell them, buy them back later at a lower price, return them and claim the difference. a.i.g. laughed all the way to the banks. except they are banks. whatbout a.i.g.? according to the first few pages of their 10k, when they returned

1:04:47 to 1:05:08( Edit History Discussion )

Alan Grayson: the securities to a.i.g., a.i.g. had trouble coming up with the sh because, first of all, the mortgage-backed securities market had blown up, and secondly, the securities that a.i.g. had lent out were worth far less at that point. hence the federal bailout at $150 billion and counting. and this money, by the way this money that the federal

1:05:09 to 1:05:29( Edit History Discussion )

Alan Grayson: government is giving to a.i.g., a.i.g. lists that money as shareholder equity, are not loans on its own financial statements. now, why would a.i.g. do something as convoluted and nutty as this? to goose its profits a few points by counting both the return on lent securities and

1:05:30 to 1:05:50( Edit History Discussion )

Alan Grayson: the return on the mortgage-backed securities both as its profit. in other words, the motive was greed. obviously, a.i.g. shouldn't have company ever should be able to do it in the future. this is the kind of financial innovation that brings into focus why we need to regulate.

1:05:51 to 1:05:56( Edit History Discussion )

Alan Grayson: in order for this country to survive. the choice is not between regulation and freedom, the