Taken from videos made Jan. 26, 2010 and available to view on You Tube here

“The AIG Situation: Tax Payers Have The Right To Know”

Current event question: Some e-mail is coming to light about the AIG bailouts and the secrecy involved with them. As president of Truth In Government and the author of the CFO Act, give us your take on this. Shouldn’t the taxpayers have the right to know?

Joe DioGuardi: Absolutely. I’m a certified public accountant. Some of the ideals that CPAs espouse are transparency, objectivity, and full disclosure. We haven’t seen that in the federal government, not in the way the financial statements are put together.

But now we have the issue of government money being used to bail out a company, and then the money was used to pay counterparties because of these credit default swaps and collateral debt instruments. We don’t know exactly who got that money, but we do know that a hundred percent was reimbursed to companies like Goldman Sachs.

Now, you know, one might say there are a lot of people on Wall Street from Goldman Sachs who got into government and is it possible there is some conflict of interest here?
You can’t determine these things unless you have information and access to information. This is our money. This is the taxpayers’ money. There is no reason why any of this should be kept secret. We should know where this money went. And if people got hundred percent reimbursed that somehow had special access to Mr. Paulson, who by the way came out of Goldman Sachs, I think there’s a lot of smoke here. Where there’s smoke, there’s fire. I’d like to understand more about how this was done. I think the taxpayers are entitled to it.

“The AIG Situation: National Security Matter or Poor Excuse?”

Some of the AIG information has been deemed to be a national security interest, does that create an alarm in your mind?

Joe DioGuardi: Well, I don’t see the connection between accounting information, basically accountability, and national security. We’re not dealing with foreign entities here, as far as I know, and if we were they would be financial entities. These were business transactions. These were not transactions with countries that we have partnerships with in our war on terror.

They’re making the connection between this simple business transaction of bailing out a company that did some wrong things—and there is some question as to whether they should’ve been bailed out—then we find out that the bailout money went to the counter parties in these transactions that actually caused the problem to begin with, because we had an unregulated market called credit default swaps. That’s what this is all about.

AIG had to be bailed out to some extent because if it went under, no one knew the extent of what the damage would be. Because on both sides you had trillions of dollars of transactions that were basically not on an exchange, unregulated, and not covered with any reserves. That’s what this is all about.

This was supposed to be named for what it was, an insurance contract. But once you call it insurance, you come under the commissioners of insurance in each one of the states. So they very neatly changed it to a credit default swap instead of an insurance policy against some kind of an issue they wanted to insure against.

I think we’re entitled to know more information. And calling this a national security issue is looking for an excuse to not give us the information. It’s a poor excuse.

The AIG Situation: On Timothy Geithner and the Fed

The name Timothy Geithner keeps surfacing as somewhat of a problem, apparently he had a role early on in this and now he’s secretary of the treasury. Does that give you concerns about who’s minding the store?

Joe DioGuardi: Well, you know he’s not the only one that has had problems. Many of the appointments of Obama never even made it to office because they were discovered to have had conflicts, or they didn’t pay their taxes. As a matter of fact, if I recall, Mr. Geithner was one who had to redo his tax returns to get the position.

You know, I don’t know exactly what he did when he was with the Fed. And that’s one of the problems. There’s a bill in Congress right now that was introduced by Congressman Ron Paul to audit the Fed. I spoke at a rally on behalf of that bill, but I went further. I said that we need independent audits not only of the Fed but all agencies in the US government. Right now, we have no independent audits.

I don’t think we need to audit the money market activities and the things that the Fed needs to keep close to their vests so that people don’t get information and train on that.
But we need to know how much was the money supply expanded? We need to know how many loans were made directly by the Fed? We need to know what is the balance sheet of the Fed right now? This is taxpayer money and they are dealing with the “full faith and credit” of the United States of America even though they are an independent agency.

I don’t want to see us get rid of the Fed. I don’t want to see us totally control the Fed. Because I think you need to have monetary policy on a separate track from fiscal policy.
Fiscal policy is taxing and spending. Monetary policy involves interest rates and the money supply we need in order to make sure we have a smooth, working economy.
But I think it’s a problem to rely on someone like Tim Geithner when we know that he did play a role before he became secretary of the treasury. I think he needs to be grilled and there needs to be more oversight on what is happening.