Bankruptcy law blocks AIG recovery

The 2005 bankruptcy law passed by the Republican House, Senate and President is preventing the current administration from properly disposing of AIG. In short, the problematic change is to move the holders of derivative contracts to the head-of-the-line in a bankruptcy hearing.

How can the order of payouts in bankruptcy make a difference? According to the International Bank of Settlements, BIS, in Switzerland, there are 1000 Trillion dollars in active CDO, and CDS derivative contracts. The world GDP is only 60 Trillion dollars. If we payoff the bad derivative bets before, say employees, creditors, or shareholders, we will have a massive movement of dollars from stakeholders to financial gamblers. A massive transfer of wealth from the tax payers to the owners of these derivative contracts. Unless the laws are changed back, we will be paying our tax dollars for generations to make good on these financial market creations.

Push your elected leaders to repeal the 2005 bankruptcy bill. We must not payout on Wall Street bets with our futures. Remember AIG has already sent about 90 Billion dollars to other banks, some outside of the US, to payoff these derivative bets. Once the derivative contracts are placed at the back-of-the-line in a bankruptcy hearing, we can start to properly unwind the failed financial institutions and start on the road to recovery.