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Category: Investment, Natural Gas
Bottom Line: AIG Payments were Borderline Illegal; Geithner is out and Bernanke will be Re-Confirmed
By Senior Energy Industry Executive Karl W. Miller
January 27, 2010
Energy Commentary from Karl Miller - Read Bio and More info
Institutional investors knew that AIG counterparty payments of 100% of credit default swaps was in essence "a gift" at the time they accepted them from the Federal Reserve.
They also knew that the going bid on the street was less than ten (.10) cents on the dollar for their claims at best, and they would have no recourse in bankruptcy.
No credible CEO or Board of Directors for U.S. Financial Institutions should have accepted the 100% of funds, and should have seen what would come from these payments, on the back of multiple other bankruptcies and bank failures. Public outrage, especially given the bailout money they received, and the profits and bonuses paid on the back of the bailout funds and AIG payments. It was wrong, and they knew it at the time they took the money.
Even for the most ardent and hard core capitalist in the market like Mr. Miller, there is no doubt that improper preferential payments were made to AIG counterparties across the board.
The question is what can be done about it now, besides removing Geithner from the U.S. Treasury, which Mr. Miller believes is a foregone conclusion.
Bernanke will be re-confirmed at the Chairman of the Federal Reserve, despite his role in the AIG bailout, if for no other reason than to provide confidence to the global markets that the U.S. is not in a total tailspin and completely out of control on fiscal responsibility.
Mr. Miller does not believe that this will help the U.S. Dollar in the near, and expects a continued decline until the U.S. Deficit issues are addressed with firm legislation that is ratified, the health care bill is either killed or amended and passed, and the Obama administration formally capitulates on the flawed Cap and Trade and flawed renewable energy plan.
Mr. Millers Office
About the Author:
Mr. Miller is a globally recognized energy executive and institutional investor with a balance of both financial and energy sector expertise. Mr. Miller began his career on Wall Street during the 1980s and has an extensive background in banking, commodities trading and risk management.
Mr. Miller is acclaimed for multiple ground breaking market calls and investments, including the U.K switching from a net gas exporter to a net gas importer in 2000, called the California energy crisis in 2001, called the Ethanol and Bio diesel boom and bust in 2007, called the renewable energy boom and bust cycle underway in 2008, and most recently called the revival of natural gas in the United States in 2009.
Mr. Miller has a long history in the global energy business and has held a variety of executive management positions both within the United States, Europe and Asia. Mr. Miller has bid on over $25 billion in energy related assets during his career.
Mr. Miller has built, restructured and managed energy businesses for major public energy companies on several continents, including PG&E Corporation, Electricitie de France, El Paso Energy, Enron Corporation and JPMorgan Chase.
Mr. Miller holds an MBA in Finance from the Kenan-Flagler Business School at The University of North Carolina, Chapel Hill. Mr. Miller also holds a B.A. in Accounting from Catholic University located in Washington DC.
Disclaimer:
This column, Energy Commentary from Karl Miller, is the opinion of Karl Miller.
Content found in the articles is subject to the terms found in the InvestorIdeas.com disclaimer and does not represent a recommendation of investment advice. Investors should seek the advice of a qualified investment professional prior to making any investment decisions.
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