GAO Recommends that Treasury Demand “Concessions” from AIG’s Counterparties “Including Seeking to Renegotiate Existing Contracts”

According to the Financial Times:

The Government Accountability Office on Tuesday recommended the Treasury should demand “concessions” from AIG’s counterparties and executives “including seeking to renegotiate existing contracts”.

Yes! This is what I and others have been urging for months.

This is what the nobel economist who helped created the pricing structures used in credit default swaps is suggesting.

Force the credit default swap counterparties to take a huge haircut. This is the only way to save the economy.

In related news, the Financial Times article also notes:

The special inspector-general for the troubled assets relief programme told Congress on Tuesday … he was to prepare an audit of the decision to repay in full counterparties of AIG.

The audit – if allowed to proceed without interference – will prove very interesting.

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