Fed Chairman Bernanke went to the Senate Budget Committee yesterday to testify. The Senators asked him at least four times, and in different ways, where he is burying the loot that is being shovelled his way. And, at least four times, he refused to answer.

Should Bernanke be able to treat this information as if it is confidential, like he's the doctor, or lawyer, or shrink for these crazy financial institutions which have grown malignantly throughout the innards of the republic? Or should he cough it all up and confess what he's been doing with the tax payers' money? What do you think? Do you have a view on this?

Do you think Bernanke has a right of confidentiality with his bonker clients? Or do you think we have a right to know? Do you think his confidentiality outweighs our right to know? Or do you think our right to know has priority?

I think it would be a good idea to let Senators Wyden (Or), Dorgan (ND) and Bernie Sanders from Vermont know that they have some support in what they are trying to do. They are the ones who've been named in the coverage of what happened yesterday. What about you? Do you think Senators and members of the House should continue to go after this kind of information, and find better ways to hold Bernanke's feet to the fire, as it were? Or do you think they should take "no" for an answer, and allow the Fed chief to continue to stonewall the elected representatives and senators who are trying to find something out about what their constituents have been made liable for. Like, how much? Who? What for?

These sound like pretty reasonable questions for a body with oversght authority to be interested in, don't they?

Top on the list yesterday was what is happening with the money the Treasury and the Fed are funnelling from the tax payers to the shrunken and hollowed out too big to fail insurance giant AIG . The scent of the blood dripping from the carcass of the latest $30 billion ripped out of the Federal purse, even as it was being secreted away in  Bernanke's burying places, was still warm in the nostrils of the Senators.

Wyden and other Senators  said that the identities of the banks and the other so-called counter-parties that do business with AIG and other bailed out institutions should be made public. This was according to the report from Fox News.

"They ought to have some kind of consequences," Wyden said. "There is time for some sunlight ... the public wants to know why are these people so important?"

That question didn't elicit an answer from the Chairman.

The issue is really a hot one. If AIG's losses are related to the Credit Default Swaps it wrote and sold to others as so-called insurance then there are winners for each one of AIG's losses. By making good the losses with tax payers' money the Federal Reserve and Treasury are supporting the winners of the bets against AIG. AIG's derivative contracts have become a source of income like the pass through certificates which entitle investors to income from Fannie Mae insured mortgage pools. And then it could be argued that it would not be true that AIG is being bailed out. We are paying the people who made money out of AIG with the money Geithner and Bernanke say has to be directed there. "There's no alternative."

This was discussed by David Rothkopf at the Foreign Policy web site yesterday. Here's the link.

"what's really shocking about the AIG case is how little political debate there has been about what the money is being used for. As detailed in the FT story, and as also discussed in a good story in today's New York Times, vast amounts of it, tens of billions of dollars are passing straight through AIG and into the hands of the counterparties that AIG had signed up for Collateralized Debt Obligations (CDOs), a form of investment "insurance." Each of these counterparties got paid 100 cents on the dollar. As noted in my earlier conversation with Hank Greenberg, former CEO of AIG, the number one recipient of at least the first tranche of these funds was Goldman Sachs (a deal cut by a former CEO of Goldman Sachs, Hank Paulson, while the current CEO, Lloyd Blankfein was the only major counterparty sitting in the room)."

What Greenberg told Rothkopf in the earlier discussion was that of the first $85 billion that went to AIG $30 billion went directly to Goldman Sachs as a result of that discussion between the former and current Goldman officials.Follow the link for the conversation. Rothkopf thinks the AIF bailout has become a bailout laundering process.

"AIG has become a beard in the financial bailout process. Companies that were gambling on mortgaged-backed and other securities got AIG to "insure" their bets. When the loans tanked, the companies raised a hue and cry that AIG was "too big to fail" in an effort to persuade the U.S. government to give the money to AIG... so it could pass it along to them. They got paid, bailed out in effect, but without any of the conditions going along with our other bail out deals. Virtually all of these players were private companies. Some certainly were non-U.S. companies. While some of the money going into AIG is supporting functioning traditional insurance company assets, that sucking sound you hear is hedge funds, investment banks, and other financial institutions at risk siphoning the money they need through the hollowed out carcass of AIG's benighted financial products company. It is effectively a bailout laundering operation."

In the New York Times story Rothkopf links to Edward Liddy, who was appointed CEO of the company last fall, says

Mr. Liddy said A.I.G.’s need for emergency cash from the government had stopped growing in recent weeks and had stabilized at about $38 billion. He said the vast majority of that sum had simply passed through the company and gone to other financial institutions, where A.I.G. had to settle contractual obligations, many of them involving derivatives. A lesser amount from the government had been used to bolster the capital of its own operating units.

The Hill used this issue to profile the Democrats this morning, pitting Harry Red as a supporter of the administration and Federal Reserve against a host of others from the Senate and the House. This kind of reporting indicates that expressions of support for what the Representatives and Senators are trying to do might be quite a useful thing to do.

Sanders wanted Bernanke to tell him what's been done with $2.2 trillion that have past through the Federal Reserve and into the phase space which is called a 'financial system.' Bernanke told him to go visit the Federal Reserve's web-site.

"Vermont Sen. Bernie Sanders, an independent who usually votes with the Democrats, said he found it 'unacceptable' that the central bank risked taxpayer money without detailing where the funds went.

"My question to you is, will you tell the American people to whom you lent $2.2 trillion of their dollars?" Sanders asked, referring to the size of the Fed's balance sheet.

Bernanke responded that the Fed explains the various lending programs on its website, and details the terms and collateral requirements."