It's not my usual thing to report news from other blogs but this entry on Zero Hedge is just incredible.
A trader who wishes to remain anonymous has sent them a letter claiming that AIG Financial Products (AIG-FP) built up billions of dollars of exposure to Credit Defaul Swaps (CDS) over the years, as we know.
Seeing the writing on the wall for another bailout, AIG-FP spent January and February unwinding their complete portfolio positions for many of these contracts with their investment banks. This means that the close-out with the trading desks gave those banks "the most profitable deals" ever.
In other words, AIG-FP unleashed the flood gates to move bailout funds from the Treasury through their books and into Citi, JPM and Bank of America, if true.
No wonder those banks claim to have seen a good start to the year, as do Deutsche and others.
In fact, $50 billion of the $180 billion AIG bailout were direct payments to other banks, according to Blogging Stocks.
On the basis of these portfolio changes, it may well be more.
About $1.6 trillion worth all up.
Curiouser and curiouser.
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