Bernanke’s Fake Anger Over AIG

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Media outlets are already fixated on Fed Chairman Bernanke’s outburst at this morning’s Senate Budget Committee hearing when he said: “If there’s a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG. AIG exploited a huge gap in the regulatory system. There was no oversight of the financial products division. This was a hedge fund, basically, that was attached to a large and stable insurance company, made huge numbers of irresponsible bets, took huge losses. There was no regulatory oversight because there was a gap in the system.”

With transiting Mercury, Mars, and Neptune in Aquarius opposing his natal Pluto in Leo at this time it wasn’t surprising that the Fed Chairman became a bit testy (Mars) and evasive (Neptune) at times in response to questions (Mercury) about the Federal Reserve’s loans to insurance giant AIG.

Pluto rules insurance, loans, and secrets. Citing their “right to privacy,” Bernanke refused to reveal who AIG’s counterparties were who benefitted from the government’s financial rescue of the insurance giant. For all the so-called “anger” expressed by the politicians over the scope and size of the amount of government assistance to AIG, the question is never asked why the government did not negotiate with AIG’s counterparties like the monoline insurers did.

Financial collapses and opaque financial products are also part of Pluto’s domain. If Bernanke’s anger was truly genuine he would be recommending that Congress prohibit the purchase of credit default swaps unless the buyer of the CDS owns the underlying insured security. Despite the contracting energies of Saturn and the wakeup call of Uranus to his Sagittarius Sun and Jupiter in Gemini, Bernanke refuses to do anything that would limit the enthusiasm for financial “innovation” on Wall Street.

Just as we have painfully learned that the majority of consumers with adjustable rate mortgages were unable to handle them, AIG failed to manage its risk of collateral calls triggered by credit downgrades. By choosing not to limit either of these exposures, Bernanke is being disingenuous.

No disclosure.

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