Biggovernment has presented an explosive story related to AIG and The NY Fed in which the claim is made that the trust agreement that established AIG's "grab" by The NY Fed was in fact outright unlawful:
This afternoon on Secure Freedom Radio we announced a breaking news story concerning the Administrations ongoing cover-up of AIG financial wrong-doing. In an interview with David Yerushalmi, senior litigator on the Murray v. Geithner et al lawsuit, we expose possible fraud, money-laundering and criminal activity.
I looked at the source document folks - and while most of it looks ok, there's one little line in the trust agreement that might be the problem referred to - specifically, here:
. Trust is Irrevocable. This Trust Agreement and the Trust shall be irrevocable and, except as provided in Section 5.01 hereof, unamendable except that the Board of Governors may terminate or amend its authorization pursuant to Section 13(3) of the Federal Reserve Act, thereby revoking or amending the Trust in accordance with Federal law, provided, however, that a Trustees rights to resign as a trustee hereunder and to compensation and indemnification with respect to acts or omissions occurring prior to any such revocation or amendment may not be modified without the written consent of that Trustee.
A trust of this sort, to be lawful, has to be irrevocable - you can't reserve the ability to modify it later. The NY Fed knew they didn't have the authority to take equity - thus, these "trust" agreements.
I'll note for the peanut gallery that I'm not an attorney, but I do have a reasonable understanding of the requirements for an irrevocable trust of this general sort to be valid. A phone call with the plaintiff's attorney, David Yerushalmi this morning confirmed that this indeed was the primary problem. Mr. Yerushalmi went on to assert that this establishes a prima-facie violation of the money laundering statute - an extremely serious allegation as that law, if violated, carries very heavy criminal penalties.
There is also apparently a second issue in that the beneficiary is named as The US Treasury, which is, effectively, a bank account and not a "person or entity." That's a potential problem too although I can see the counter-claim being made that "The Treasury" is in fact The institution of The Treasury, not the account called "The US Treasury."
This is an explosive allegation - if the trust is defective then it is as if it never existed, and the entirety of the AIG bailout and everything related to it may be criminally unlawful. In addition the shareholders of AIG may have effectively had their equity interest improperly stripped!
A call to AIG's corporate offices for comment was redirected to a media contact person by email (they apparently don't take phone calls) and an inquiry to that office was not immediately returned.
Stay tuned -this has the potential to get rather interesting, as the admissions related to this agreement, if I read the transcript accurately, were revealed in a deposition - that is, with the folks doing the talking under oath.
Where We Are, Where We're Heading (2013) - The annual 2013 Ticker
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.
The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Looking for "The Best of Market Ticker"? Check out Ticker Classics.
Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.
The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.
Submissions or tips on matters of economic or political interest may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.