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.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...