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The AIG Saga: A Brief Primer
The awarding of $165 million in bonuses to AIG executives has dominated the news in the last week. There has been widespread outrage over the idea that taxpayers' dollars are being used to reward the people who effectively bankrupted AIG and cost the government more than $160 billion in bailout funds to meet the company's obligations. This primer addresses some of the issues raised by both the bonuses and the much larger sum going toward the AIG bailout.
The Bonuses: What Did They Know and When Did They Know It?
One of the silliest distractions in the AIG saga has been the various accounts of when AIG told Treasury Secretary Geithner of the bonuses and when Geithner passed the information along to President Obama. This discussion is silly because Geithner almost certainly knew of the bonuses ever since the initial takeover on September 15th. He just didn't think they were important.
Geithner was the chair of the New York Fed at the time of the original takeover. In that capacity, he was the person directly overseeing the takeover. As the chairman of the New York Fed, Mr. Geithner was undoubtedly familiar with the Wall Street culture and knew that financial firms paid out large bonuses each year to their most-valued employees. Since he did not issue any directives to AIG telling them not to pay bonuses, it was reasonable to expect that AIG would do so, just like it always did.
In other words, Geithner had every reason to believe that AIG would continue to pay out bonuses even after it was bailed out by the government, because he did not tell it stop paying bonuses. He may not have considered this issue important until the last week. And, he may not have known the exact size and the structure of the bonuses, but for all practical purposes he has known for six months that AIG would be issuing million dollar bonuses to certain employees, in spite of the fact that it was dependent on massive infusions of government money to stay alive.
Does the Government Have to Pay the Money?
It is not easy to find legal ways to avoid paying for work that was already done. It is possible that the government could make it difficult for the bonuses to be collected by breaking off AIG's Financial Products division (the one responsible for bankrupting the company) and then letting this company go bankrupt.1
However, this route has two major problems. First, a main purpose of the bailout was precisely that the government wanted to honor the obligations of the Financial Products division, ostensibly to maintain the stability of the financial system. If this division went bankrupt, then it could pose risks to the stability of the financial system. The second problem is that the bonuses have already been paid. Any action would now require taking back money that was already paid out. This is considerably more difficult than preventing money from being paid in the first place.
A second path that is currently being pursued by Congress is to tax back the bonuses with a tax that is designed explicitly to apply to bonuses given to workers for companies that are being bailed out by the government. This sort of measure is a rather blunt instrument to address the problem. The resulting compensation system is certainly less than perfect (the bill passed by the House would tax back 90 percent of the bonuses received by highly paid executives), but it could hardly be worse than the compensation structure currently in place.
A third possibility is to insist that the private shareholders pay for the bonuses. Private shareholders still own 20 percent of the company. The market capitalization is approximately $2.6 billion. This means that the 20 percent stake ($520 million) owned by private shareholders can easily cover the $165 million in bonuses.
Under this arrangement, the government would tell AIG to sell enough new shares to cover the $165 million cost of the bonus. Since the money is supposed to come from the private shareholders 20 percent stake, for every share that AIG sells to the public, 4 shares will be awarded to the government. This keeps the government stake at 80 percent.
The current share price is about 95 cents. If it fell to 60 cents as a result of the newly issued shares, the company would have to sell 275 million shares to the public and issue another 1.1 billion shares to the government. This would leave the government's stake unaffected, while cutting the value of the current private shareholders' stake by roughly one-third. This route would leave the executives with their bonuses, but they would come at the expense of the private shareholders, not the taxpayers.
AIG Bailout Issues
Thus far $170 billion has been spent on the AIG bailout, more than 1000 times as much as is at stake with the bonuses. For the first time last weekend, the Treasury Department released information about how this bailout money was used. It reported that much of the AIG money went to large U.S. banks, most notably Goldman Sachs, Bank of America, and Merrill Lynch, in addition to several large foreign banks, including the French bank Societe Generale and Deutsche Bank. Most of these payments were in connection with their holdings of credit default swaps (CDS) issued by AIG.
There are at least three obvious issues that arise with these payouts:
- Did the banks hold the underlying assets, or just the CDS?
- Did the government have to buy back the underlying assets from the banks, or could it have waited to see what happened?
- Could the support for the banks have been done directly, including some quid pro quo, without having AIG as an intermediary?
These three issues are outlined below.
CDS: Insurance or Gambling?
In 2007 the outstanding nominal value of all credit default swaps was close to $75 trillion. This was approximately five times as large as the outstanding value of insurable bonds. This meant that there was an average of five CDSs issued for every insurable bond, which implies that at least 80 percent of CDSs were not owned by institutions that actually owned the bond being insured.
The Treasury and Fed have not released the rules they applied in dealing with AIG's CDS. They may have only honored CDS where the institution held the bond being insured or they may have honored all of AIG's CDSs, regardless of whether or not the bank held the bond being insured.
This makes a big difference in terms of the purpose of the bailout. If a bank had bought a CDS to protect itself against losses on a mortgage backed security, and the CDS was not honored, then it would be an unexpected blow to its balance sheet. On the other hand, if the bank was just gambling that a bond that it did not hold would go bad by buying a CDS issued against it, it is difficult to see how a failure to honor the CDS would impose a serious hardship.
There may be legal issues that would prevent a non-bankrupt AIG from choosing which CDSs it chooses to honor, but that fact may have implications for the wisdom of rescuing AIG, as opposed to just directly supporting the counterparties, where it is considered appropriate.
Did the Government Pay Off the Bets Before the Race Was Over?
The government, through AIG, paid an additional $30 billion to counterparties because it paid off CDSs at their notional value rather than their market value. In principle, AIG would have owed the notional value of the CDSs if the underlying bond had defaulted. In these cases, the bond had not defaulted. In effect, the government acted as though AIG had already lost its bet, at a time when it was still possible that the underlying bonds would not go bad.
It is important to keep in mind that CDSs are typically relatively short-lived assets. Many provide insurance for only three years and most insure bonds for five years or less. Most of AIG's CDSs were issued before 2007. This means that by late 2008, they would have already been two years old or older. In this context, it might have been reasonable to take a chance to see whether the CDS would actually have to be paid. In any case, there was no obvious reason to pay above the market value for the CDS. This seems like a straight gift to the banks.
Should the Government Have Gotten Something in Return for Giving Tens of Billions to the Banks?
When the government lent hundreds of billions of dollars to the banks through TARP, it got preferred shares of stock in return, in addition to placing conditions on the banks' conduct. By contrast, the government received absolutely nothing for the tens of billions of dollars that it passed on to the banks through AIG. It may have been desirable to ensure that AIG's defaults did not lead to the collapse of the major banks that were its counterparties, but this could have been accomplished by directly giving these banks capital through TARP or some equivalent mechanism. There is no obvious reason why it was necessary to give the money through AIG without getting anything in return.
It is worth noting that if the government had instead lent the AIG money to the banks through TARP, and under similar conditions, it would own an even larger share of these banks. Obviously the banks prefer that the money instead pass through AIG without conditions, but there is no reason that the taxpayers should prefer this route.
It is also worth noting that several of the recipients of AIG money were foreign banks. While the public has an interest in the stability of the world economy, which means preventing major foreign banks from going bankrupt, there is no obvious reason that American taxpayers should be forced to bail out foreign banks of wealthy countries. It is possible that there is some quid pro quo under which foreign governments are bailing out U.S. banks on losses suffered in their countries, but there has been no public acknowledgement of such an arrangement.
There is a possible alternative explanation. The government may have made these payments in order to preserve the international reputation of the U.S. financial industry. If that is the case, then this is a rather expensive subsidy to the financial industry. To date there has been no explanation as to the reason for making these payments.
- Posted in
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31 Comments so far
Show All"there is no obvious reason that American taxpayers should be forced to bail out foreign banks of wealthy countries"
Surely if AIG had failed to pay foreign banks then it would be in default, which would trigger claims from US banks with outstanding CDS. It would also have the effect of generating international mistrust in the financial sector which would come back to inhibit international trade.
Stinko. Poor Mr. Baker must have needed a shower after writing that one: the odor of corruption is unbearable.
Why, exactly, is the government propping up patently insolvent financial institutions? The Japanese experience of ten lost years makes clear that this is destructive policy. It isn't what FDR did, the last time we faced this.
To put it another way: cui bono? That's how most crimes are solved: motive. Who benefits? Well, the financial elite benefit, or hope to. We sure as hell don't.
And who was at the center of the whole disaster, all along? Baker answers that one in the first paragraph: Timothy Geithner. He was the regulator in charge of Wall Street when the whole pile of cards reached its zenith. So as a reward for letting disaster happen on his watch, he's put in charge of the whole tamale. How could this be?
Cui bono?
Oregoncharles
tomhairless
Let them sue us. do you think any American jury would side with rich thieves?
Tell the IRS to tie up their assets - they have skill and experience in doing this.
Tell the IRS to audit their last seven years tax returns. Is there any reason to think
these crooks filed completely honest tax returns?
Sioux Rose
These explanations remind me of advanced calculus. One has trouble keeping their eye on the bean as it moves from its hidden status under one cup to under another one, a game played at high odds. Ultimately what we're seeing is a transfer of wealth from the workers to the "owners" (a/k/a banking caste) of our society. A simpler terminology also nails what's being witnessed in plain sight, if dressed up by actors wearing suits: a THEFT of monumental proportions. The entitlement class seems to presume it's all theirs anyway. They are merely undoing the work of centuries of liberation movements, patient treaty making, the actions of millions in efforts to obtain greater civil rights. There is a reason why the Bible cites the LOVE of $ as the ROOT of all EVIL.
The love of money is the root of all evil, but usury is evil incarnate. I hate the idea of simply bailing out the existing financial system because it is so corrupt and immoral to start with. LET THEM FAIL. And out of the wreckage maybe we'll see the error of our ways in implementing these central banks worldwide. There is absolutely no reason for governments to hand over creation of money to a banking system that creates nothing but DEBT and calls it money. Why do we want to save a banking system that makes wage slaves of most of us? Why? Let it fail and replace it with something more equitable. MONEY IS NOT CAPITAl. Let the monetary system CRASH. Not one bit of capital will disappear. Capital is land, natural resources, buildings (bricks and morter), machinery, highways, bridges -- ALL CAPITAL IS CREATED BY WORKERS. Those who make money from the creation of "complex financial instruments" which are then traded around the financial markets as though they were something backed by real wealth are nothing more than perpetrators of massive fraud. A credit default swap is a piece of paper and that's all it is. And this government expects ME to pay for losses in "toxic assets" by which they mean credit default swaps? NO. NO WAY. I have lost all respect for this "nation of laws" bullshit. The wealthy ignore all laws and are rewarded for it. I'll tell you what I've learned over the last couple years. STEAL EVERYTHING YOU CAN BECAUSE NOBODY GIVES A SHIT.
ekaton
First, if the collapse of one company can pose such dire risks to the stability of the financial system, then the conversation should be about dismantling said company - and any and all companies - whose singular collapse can ruin the lives of hundreds of millions of people.
If Saudi Arabia - the AIG of oil - decided to shut off their spigots, we'd bomb the living shit out of them, not send them hundred of billions to get them to reopen the pipes.
Second, why are "we" still f#@king around - we already "own" 80% of AIG. For a paltry $520 million, we can buy the rest, then fire the scumbags, install our own "best and brightest," and then dismantle the company and sell off the pieces. When you put 20% down on a house, the bank owns the other 80%; you don't pay, the bank takes the house and resells it.
Isn't it obvious that We The Taxpayers are being royally jerked off? Again?
if you had watched the hearings on wednesday, you would see that in september the fire squad came to put out the fire. the bonuses were pay for work already done to reduce the toxic entanglements from $2.7 trillion to the $1.6 trillion currently entangled. the people who did the damage are not the people who are unraveling the toxic threads. go to c-span.org to see the hearings and see that the media have done a horrible job of informing us.
for peace and sustainability
These seems to be a great fear (many, like Obama, even deny anything wrong happened) of prosecuting (for fraud) the AIG crowd, not to mention the rest of the people running the failed banks--Citigroup, etc.
What was their fraud? They knowingly labeled toxic subprime mortgages as AAA securities. Selling crap as gold is fraud.
Sioux Rose
DR WU: I think you nailed the central crux of the fraud engendered, but as I'm sure you know, there were so many other related deceptions or legal frauds involved, not the least of which was the mindset that came up with these "toxic products" as if they represented a basis for profitability!
The rating agencies are guilty of avoiding "due diligence". If they were required by law to "justify" those ratings, this country might not be in the bailout position we are in right now.
My understanding is that these rating agencies, that get paid by the business' they are rating, are protected under the law as "opinions" which fall under the protection of the First Amendment as "freedom of speech".
So, as the story goes, the "best and brightest" fraudsters on Wall Street who are responsible for this crisis, will walk away with $$multi-millions in bonuses unscathed, because the people we voted into office (for decades) on Capitol Hill did nothing to prevent this massive fraud.
I agree that selling crap labeled as AAA gold is a form of fraud. However, it was the US mortgage bundlers and the Wall Street investment houses - not the insurance giant AIG - that dreamed up that particular long running leveraging scam. What the Financial Services segment of AIG (particularly AIG's London branch) pioneered was creation of a market in credit default swaps (CDS's, to use Baker's nomenclature).
The fundamental nature of these esoteric, wholly unregulated, wholly private enterprise-generated instruments (as best I can decipher it) is that I trade some some of my gold painted crap for some of your gold painted crap. Both of us knowing full well that this swap is entirely a crap-for-crap transaction. For a "premium" fee we both pay to AIG for facilitating the transaction, AIG issues us each an "insurance" policy, promising to pay all or some of our respective losses when default day on this toilet paper arrives. Us swappers have now each diversified the riskiest parts of our investment portfolios, and each of us has hedged our future losses. Ain't we clever?
They didn't call this stuff toxic waste in the jargon of the trade for no good reason. What is startling about Baker's article (if I understand it right) is that something like $75 trillion in artificial paper wealth was created globally through the credit default swap market. It was 21st Century alchemy.
In terms of the public policy contours of a federal bailout, I believe the distinction that should be drawn is between mortgage (or subprime mortgage) backed securities, and credit default swaps. The first category of troubled asset should be re-valued, the underlying debts restructured, and the market in such financial products preserved under proper regulatory scrutiny. Those credit backed security instruments still are ultimately based upon real people living in real houses, and real businesses in real commercial properties trying to produce real products or services.
In contrast, the second category (CDS's) should be declared null, void, and given an economic value of zero. Not one penny of public tax dollars should go to shore up the rich suckers who participated in and churned an artificial, phoney market in which shit was being intentionally traded for shit (while all participants pretended it was gold). Credit default swaps never had any social utility whatsoever that I can see, in terms of goods or services linked to the real world needs of real human beings.
Ominously, if Dean Baker's description of the treasury department's disclosures to date is correct, the federal government may have already failed to draw the distinction I urge. If the US treasury has indeed embarked upon the path of making good on the credit default swaps that AIG facilitated (the bad CDS paper held by the big US and European banks), then American taxpayers have about $74 trillion more in bail out funding yet to go.
I do not believe the Chinese nor the petro sheiks have anywhere near that much to lend us, even if they were stupid enough to do so. That's why I say the whole CDS scam should be written off, as a matter of public policy. Caveat emptor.
Now let's see who's too big to fail. It won't be anybody anywhere near Main Street.
Which is precisely why Congress declined to regulate the credit default market in the first place (a tragic policy decision of course, in retrospect). Only the super rich, sophisticated investor would even be allowed to ante up and play the credit default swap game. So let them eat their own cooking, even if it tastes like the crap it always was.
Bill from Saginaw
Bill, I'm glad you're reading and thinking about this.
But consider: what if, instead of bailing out the banks so they could pay the CDS's, we had taken a different route?
1. Call for a freeze on all CDS sales and payments.
2. Step in and say the Fed would deal with the underlying real estate problem: If we bailed out or bought the mortgages that were going bad, or about to go bad, even at bubble prices, we could then claim that no one could collect on a credit default swap, because the bonds would not default if the Fed was stepping in to prevent it.
3. This would, temporarily, make the CDS's unnecessary, so the Fed could pass a law saying the CDS's were illegal, and that folks had a choice: they could either refund the fees collected on CDS's to the purchasers, or the Fed would tax the living crap out of any fee collected, and any payment paid out. Through major taxation, give both parties more incentive to pay back the original fees (through the private banking system fixing itself) than to go through with the gambling via CDS's on mortgage-backed securities parties didn't even own.
4. In this way, shut down the CDS market, at least in the US, and encourage the rest of the world to do the same because they were found to be toxic financial weapons of mass destruction, in Warren Buffett's words. Impose economic sanctions on any country that did not do the same.
5. Require Switzerland and the Cayman Island banks to continue to hold to their new, open policy, so that we could see if any individuals, corporations, or politicians had ties to folks who profitted greatly from CDS's already paid.
I have more ideas, but I have to work on writing them up. It has to do with the conflicting and misleading metaphors and narratives about what happened with the CDS's, the sub-prime and NINA loans, the "bad debt," and other nebulous stuff we're being fed. Too few of us even understand what happened, and too many of the metaphors and narratives conflict. This is sometimes an indication that we're being fooled or robbed blind, while others, who understand parts of the real narrative, are making off like bandits.
Bill,
AIG took the scam to another dimension. Because they held a triple AAA credit rating, the CDS they issued hasd a AAA rating regardless of the rating of the underlying asset. Banks were therefore able to use the CDSs to improve their capital position which they could not do with the underlying assets.
They dumped a whole lot of (lead based) gold paint on a whole lot of crap.
It's just sickening to keep seeing these pathetic articles that beat around the bush will an air of apologetics for these conspiritors of the largest theft ever!! Geithner and Summers and the rest of the Banksters including Obama are in on this theft of the public wealth into the hands of the fascists!!! When will these pansy journalists start calling a spade a spade? Most of our politicians are carrying out treasonous acts and need to be removed from office immediately and prosecuted along with the rest of the arch-criminals that have been ransacking this country for years!! America! Wake Up!! Its time for direct action! Mat Justice prevail!!!!
I agree, the pushback is sickening, but typical.
Do you know how much money are WS execs and fat-cat investors fighting for these days ? Obama cannot go against these masters of the universe cold turkey and deny them the bailout they "deserve" (since they "concede" to the taxpayers the money that the taxpayers earn anyway, according to their delusional self-serving world view!). If he did, this neo-feudal class of parasites would cough up in a sec more than enough savings to hire full time and for several years every one of the many mercenary armies of the USA plus the whole of organized crime, just to get rid of him. Obama must proceed carefully so he can change things when it's possible. Time is on his side since the dozens of trillion dollars of financial vaporware that need to be "saved" cannot possibly be "ameliorated" without ruining the USA or ruining the fat cats. So be patient and be careful about what you ask for, else you may end up having to whine about "the friend of the usurer" aka joseph biden...
the whining and hoping for the great leader's redemption must stop. what helps now is i) to publicize non-stop which are the great fortunes that demoblicans are trying to save by "saving the financial system" and denounce their owners as members of a neo-feudal class with names and addresses (no, nobody wants to save "the banks" or "WS", how can anybody be so naive and fall for such an obfuscation!); ii) convince the public that the bailout money should be used to jump-start the economy directly with or w/o the co-operation of WS and private banks; iii) make sure that obama and the demoblicans are confronted at every stop with questions about who are the specific *individuals* who would benefit personally most if the financial system is "saved" and why exactly these *individuals* deserve so much to be saved at a price of billions of dollars each.
changing the public's mood and informational sophistication will give obama the freedom to move in the right direction. he is smart, he does not want to be a martyr and go down in flames.
so let's stop complaining about WS, the banks, and the great leader's lack of leadership and vision. let's make sure the citizenry understands where obama should go and why and that it starts demanding it and loudly so. ask the citizenry if it really wants, e.g., that the randolphs' billions in derivatives be purchased at face value from them by the taxpayers "to save the financial system".
Public Hangings.
Careful Harry. You sure you want to be a member of that crowd?
I'm glad Baker is exploring the insurance vs gambling metaphors.
And it's obvious that the CDS's were the larger problem, and not just the default of some sub-prime loans.
But what's disgusting is this:
1. If some parties owned CDS's but DIDN'T own the underlying bond (in other words, if they were gambling/speculating instead of insuring their loss), then why the h*ll doesn't congress step in and tax these at 99%????
2. If a bank can own Adjustable Rate Mortgages (ARMS), many of which might include sub-prime or "NINA" (No Income No Asset) loans that were doomed to fail, AND if it can buy a CDS to cover the loss, it suddenly has LITTLE incentive to make loans that work, and GREAT incentive to raise the ARM rates so as to trigger the series of events that will result in cashing in on one or more CDS's.
- Why does congress even allow this stupid incentive system of CDS's to cover loss? It gives too much incentive for banks to give bad loans in the first place, and then it covers the loss with bailout funds????
- We should be taxing the hell out of the CDS payments, EVEN IF the CDS was owned by a bank that owned the bond, like "insurance."
3. Why tax the bonuses at only 90%?? If one guy got a 4.5 million dollar bonus, he's still taking home $450,000!!!! This could pay for ten public school teachers in many districts!! What were they thinking?!
Buying CDSs that pay you when your bond fails may be legit insurance. But buying CDSs that pay you when someone else's bond fails is simply gambling. The difference is that by owning the bond, you are supposedly contributing to society by assuming investment risk, and the insurance merely pools the risk, which is supposedly even better.
But the very idea that elites assuming investment risks benefits societies is highly dubious in light of the people's need for self-determination and fulfillment, i.e to assume their share of both the risks and rewards. And so the whole premise behind high finance rests on extremely shaky ground. This is why may people curse the whole goddamned thing.
Gambling is wacko because when you buy a CDS, but you don't own the bond that it "insures", you never assumed the investment risk that comes with the bond so you never took a chance for the betterment of society. In fact, you only took a chance for your own "betterment" at the expense of society, because if casino royale manages to pay your jackpot (a big if), this waters down the value of the money already in circulation, i.e. more money in circulation without more products/services/assets in circulation, thus more money and thus more power/control for the elites, and less for the people.
And that's the best case scenario. At worst the wild economic gyrations put undue hardship on masses of innocent people. And the fact that the media keeps the people in the dark is yet another layer of the crime.
”Whether it's AIG, Citi, Morgan, B of A, Merrill, Goldman Sachs, or any other the other thieves, who expropriate and commit fraud by the modern 'innovative' alchemy scheme of "negative externality cost dumping'; the sentence must be the same ---- total restitution of 'commonwealth' funds, and then prison.
"Claw-back", restitution, and disgorgement are not expropriation when the taxpayers' 'commonwealth' has been looted ----- even when the looting is guilefully accomplished through 21st century theft via 'negative externality cost dumping' of ‘debt bombs’ on the public.
The first chance for the looting banksters, hedge fund whores and private equity pirates should be 'claw-back' until the term NBCB (nothing but claw back) becomes as oft repeated as Thatcher's inane TINA. [See, there IS an alternative, Margaret.]
Then, when 'claw-back' doesn't cause the ruling-elite Empire to drop the loot (which they won't), the second phase must be 'capital reform' --- akin to the success of 'land reform' when the elites fail to allow land or capital to be used effectively for society's needs.
'Capital Reform', like 'land reform', is close to expropriation --- but expropriation for reason, and is legally done if the government complies with the will of the people. If the government does not, either because it is totally controlled by the ruling-elite, or Empire, then the government needs to be reformed itself --- "with extreme prejudice", as the saying goes.
Here’s the best analysis of the situation that I have seen --- which, incidentally, quotes the NYT.
http://www.wsws.org/articles/2009/mar2009/pers-m17.shtml
Oops, nothing left to say.....everthing has been nicely covered. Thanks to you all.
Re-read the following passage from Dean Baker's article, "The AIG Saga: A Brief Primer:"
"In 2007 the outstanding nominal value of all credit default swaps was close to $75 trillion. This was approximately five times as large as the outstanding value of insurable bonds. This meant that there was an average of five CDSs issued for every insurable bond, which implies that at least 80 percent of CDSs were not owned by institutions that actually owned the bond being insured."
Now see the film/play "The Producers." Selling "five times as large [credit default swaps] as the outstanding [insurable bonds]" is equivalent to what Max Bialystock and Leo Bloom do in "The Producers," selling more than 100% ownership in "Springtime for Hitler." However, in the "The Producers," the risk was success. For AIG, the risk was failure. In both cases, the chickens came home to roost. Difference is, Bialystock and Bloom windup in prison. AIG personnel windup with multi-million dollar bonuses.
If an insurance company sells policies to insure debt instruments and knows it can never pay off these policies if the worst happens - is this gambling, OR FRAUD?
Why is this always referred to as a "bailout"? If the government owns 80% of AIG, doesn't that make it more of a "buyout"?
AIG: all ignominious gangsters!
i posted this comment elsewhere, but it fits obliquely here:
the aig bonuses were for performance after the completion of a
"book of business," which involves unraveling trillions of dollars of
toxic assets. the merrill lynch bonuses were a feat of raiding the
public treasury by sneaking them in just before bank of america took
over the whole thing. my source for the aig bonuses was the wednesday
hearings grilling edward liddy on his dollar a year performance since
taking over aig in september. the merrill lynch stuff was done just
before bank of america took over, and it involved such things as a
"parchment waste basket" for thousands of dollars for the guy who headed
merrill lynch at the time--john thain. my source for that was the
newscasts at the time.
the article about bernanke misdirecting the anger shows who misdirected
anger from himself to aig and the president. it was bernanke who should
have done something about aig, merrill lynch, bank of america, citibank,
and the other miscreants from his position as first, governor of the
federal reserve and then head of the fed. you have to read all the
articles to see where things (and my mind) changed.
obama missed a chance last night on the tonight show to say that the
current execs at aig are not the ones who ran it into the ground along
with the world finances. basically, i am not impressed with how obama is
handling this, and geithner is not a public announcement type of person.
we can hope that the currently touted banking regulations that geithner
is to release in a couple of weeks are up to the task given them: to
regulate future financial institutions and to give us all confidence
that future governmental efforts will be effective in preventing future
financial meltdowns.
as for dean baker's clarifications, i will get this link to the other site.
for peace and sustainability
Glass-Steagall repeal Senate vote- 90-8 for, brief recap
REPUBLICANS FOR (52): Abraham, Allard, Ashcroft, Bennett, Brownback, Bond, Bunning, Burns, Campbell, Chafee, Cochran, Collins, Coverdell, Craig, Crapo, DeWine, Domenici, Enzi, Frist, Gorton, Gramm (Tex.), Grams (Minn.), Grassley, Gregg, Hegel, Hatch, Helms, Hutchinson (Ark.), Hutchison (Tex.), Inhofe, Jeffords, Kyl, Lott, Lugar, Mack, McConnell, Murkowski, Nickles, Roberts, Roth, Santorum, Sessions, Smith (N.H.), Smith (Ore.), Snowe, Specter, Stevens, Thomas, Thompson, Thurmond, Voinovich and Warner.
DEMOCRATS FOR (38): Akaka, Baucus, Bayh, {{{{BIDEN}}}}, Bingaman, Breaux, Byrd, Cleland, Conrad, Daschle, Dodd, Durbin, Edwards, Feinstein, Graham (Fla.), Hollings, Inouye, Johnson, Kennedy, Kerrey (Neb.), Kerry (Mass.), Kohl, Landrieu, Lautenberg, Leahy, Levin, Lieberman, Lincoln, Moynihan, Murray, Reed (R.L), Reid (Nev.), Robb, Rockefeller, Sarbanes, Schumer, Torricelli and Wyden.
REPUBLICANS AGAINST(1): Shelby.
DEMOCRATS AGAINST(7): Boxer, Bryan, Dorgan, Feingold, Harkin, Mikulski and Wellstone.
NOT VOTING: 2
REPUBLICANS (2): Fitzgerald (voted present) and {{{{MCCAIN}}}}
This is what started it all and Mr. Clinton signed it. We should now reenact it even though the pigs have escaped.And remove all who voted for it
Might Obama order every bonus recipient and their spouses carefully audited? For the last seven years? These thieves to a one would be crammed into Al Capone's old cell.
Why is Kucinich against bank nationalization?
Could someone hit him upside the head for me? still...Kucinich 2012!!
Dean Baker for treasury secretary!!