In addition to the federal money it took last fall, it benefited from the government’s bailout of the American International Group, being paid 100 cents on the dollar for its $13 billion counterparty exposure to the insurer, and it has $28 billion in outstanding debt issued cheaply with the backing of the Federal Deposit Insurance Corporation.

They simply should not be allowed to continue doing this. Making record profits by trading with tax payer protection is not going to create the jobs that are needed for the economy. Gasparino has some remarks about the topic in the video below.

CNN suggests AIG is too far gone to ever come out of “pseudo” bankruptcy.  Duh… The government has been keeping the brain dead company alive so it can harvest body parts from the carcass and transplant them into the banks… a kidney to Citi, another to BofA, a liver to Goldman…

Baseline Scenario is calling for laws to prevent conflicts of interest like that reported by the NYT:  the CEO of AIG, Edward Liddy owns $3million of Goldman Sachs stock.

“Let me be very clear on my position vis-a-vis AIG-Goldman and the broader Washington-Wall Street Corridor.  I’m not saying that anyone has broken any laws, but rather that laws need to be changed.”

But really, we already have laws against this- they just aren’t being enforced by the Obama administration.  Why not?  It’s simply not in the best interest of the government to enforce the laws of the land when the government is complicit in violation.  Manipulation of the stock market to benefit the banks is illegal too, but that law’s not being enforced either. Why not?  We guess the government doesn’t have to obey the law “in times of crisis”.

In a guest post at Naked capitalism, Tyler Durden, publisher of Zero Hedge, builds on his breaking story that  AIG sold securities (unwinding large portfolios of CDS’s) at ridiculously low prices to the money center banks so the banks could make those much ballyhooed assertions of profits in January  and February which sparked a rally in bank stocks.  Approximately $1 to 2 billion per bank was made on these shenanigans.  This conspiracy is clearly undertaken with the full knowledge of the Obama Administration.  If this is confirmed by other sources, there should be resignations and prosecutions over this…

From CNBC.com :

“I find it impossible to understand why we as taxpayers are bailing out foreign banks,” said Thomas H. Patrick, a founder of new Vernon Capital and a former top executive at Merrill Lynch. “If the shoe was on the other foot and major U.S. institutions were exposed to those banks, would the U.K. or the E.U. tax their citizens to pay off JPMorgan? There has to be some explanation of why we decided to do that.”