The US Taxpayer being shafted: What about the UK?

I was notified of this story over at Zero Hedge by a mate of mine on the Asia Desk of a well-respected Newswire.

It involves AIG and shows, basically, that the Banks were gifted fat margins at the expense of the US Taxpayer when AIG offloaded positions to the effect that each bank made something like USD1bln-2bln each. EACH:

AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

And it got worse, as the ISDA ammeded the rules so that the trades could occur (as in not be seen as failing best execution) as long as a rather weak criteria was met:

So - in simple terms, ISDA, which is the only effective supervisor of the Over The Counter CDS market, is giving its blessing for trades to occur (cross) below where there is a realistic market bid, or higher than the offer. In traditional equity markets this is a highly illegal practice. ISDA is allowing retrospective arbitrary trades to have occurred at whatever price any two parties agree on, so long as the very vague necessary and sufficient condition of "market quotations may be difficult to obtain" is met. As anyone who follows CDS trading knows, this can be extrapolated to virtually any specific single-name, index or structured product easily. In essence ISDA gave its blessing for below the radar fund transfers of questionable legality. The curious timing of this decision and the alleged abuse of CDS transaction marks by and among AIG and the big banks, is striking to say the least.

As Zero Hedge rightly points out:

This wholesale manipulation of markets, investors and taxpayers has gone on long enough.

But I doubt it will end there. Prepare for an even greater shift of wealth from the many to the few without consent and under the counter. Prepare, too, for such "deals" to occur in the UK, ripping off the Taxpayer, rewarding failure and distorting the markets.

Ayn Rand was so right when she said:

"One of the methods used by statists to destroy capitalism consists in establishing controls that tie a given industry hand and foot, making it unable to solve its problems, then declaring that freedom has failed and stronger controls are necessary."—Ayn Rand, 1975

And Statists we have. I just wonder how and when we will be AIG'd.