It is virtually impossible for anyone except perhaps an accountant to decipher the trail of changing funding commitments and modifications in preferred stock, equity grants, lending facilities, and transfers of interests in special purpose vehicles that have deeply entwined the Fed and Treasury with AIG….
Because of its status as an S&L Holding Company, AIG* was also subject to consolidated supervision as a whole entity by the OTS**, and this included its foreign as well as domestic businesses. It chose to ignore or delay responding to the OTS examination recommendations on its risk taking, and one can argue that OTS was ineffective in discharging its responsibilities….
OTS was also recognized as AIG’s consolidated regulator by the international community. OTS’s Polakof testified that OTS participated in a number of meetings of the college of supervisors concerning AIG, that yearly international meetings had been held by AIG’s various supervisors, and that OTS had examined AIG. Furthermore, OTS had also specifically looked at and commented to AIG’s board on the risky activities that AIG FinancialProducts had embarked upon….(OTS also gave us Countrywide, IndyMac, and Superior S&L, just to mention a few failures of regulatory oversight.)
*AIG got $182 billion in fed bailout money by mid-2009. “Indeed even though we all knew AIG as a mammoth insurance company it has technically been an S&L since 1999 when it bought a little Savings & Loan in Newport Beach, California.” -Nomi Prins: It Takes a Pillage, p. 76. What Prins is saying is that AIG qualified through this loophole to put their schemes onto the US public via public legal liability to underwrite them.
**OTS–Office of Thrift Supervision, headquartered at Washington, D.C.
7-30-2011 Initially, the first real leader of the OTS, T. Timothy Ryan , shut down thrifts and OTS suffered as they lost “clients”. In the mid 1990s, OTS management, especially OTS Director James Gilleran, made a concerted effort to market themselves as the easier softer regulator….
Countrywide and others headed their call. In 2005, Countrywide switched their charter and became a Thrift….When Countrywide spun off IndyMac, guess which regulator they chose? OTS of course! …Even the FDIC couldn’t get past OTS management to protect “their” thrifts. http://blog.stonestreetadvisors.com/2011/07/30/a-case-of-regulatory-capture-ots-deconstructed/