AIG Responsible for Banks’ Miracle Profit?

Zero Hedge has this scary report from an anonymous trader: Those unexpected profits at US banks in January and February weren’t as miraculous as they seemed. Not so coincidentally, those were the months when AIG’s financial products division was unwinding a huge number of its contracts—using taxpayer dollars. Such massive, desperate unwinds were exactly what the government’s takeover of AIG was supposed to avoid. The trades, explains Seeking Alpha, “were allegedly enormously profitable” for the biggest banks in the credit default swaps market. Says the anonymous trader: “I think for the big correlation players this could have easily been US$1-2bn per bank in this period.”