Mar 17 2009
DC Dems Did Not Deflect AIG Scandal – UPDATED!
Update: So now we know it WAS liberals in DC who allowed AIG the loophole to award bonuses with taxpayer money – in fact it was a Democrat Senator who has been a top recipient of AIG campaign donations:
While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009†— which exempts the very AIG bonuses Dodd and others are now seeking to tax.
The amendment made it into the final version of the bill, and is law.
Separately, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.Â
Nothing corrupt here folks! Dodd gives AIG the loophole, they donate to his campaigns. Eat your heart out ex-Governor Blagojevich – this is how to get kick backs. – end update
As I predicted yesterday, the faux outrage of Dems to the reality that AIG must meet its financial commitments using tax payer funds was an attempt to deflect outrage from the pols onto the businesses those same pols decided to bailout. So far, the attempted deflection is not working and the DC pols are getting a strong (and well deserved) backlash from the country:
President Obama’s apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.
…
The populist anger at the executives who ran their firms into the ground is increasingly blowing back on Obama, whom aides yesterday described as having little recourse in the face of legal contracts that guaranteed those bonuses.
Look, we are all hurting financially. We have lost half our wealth either from the market drops or the decline in real estate values, or both. The fact these fat cats are being bailed out and all of us who have played by the rules, paid our bills, acted responsible are the ones not being saved is going to create a tsunami of a backlash.
Why shouldn’t DC pay million dollar bonuses to those of us meeting our obligations? After all, its OUR money!
Interesting little passion play yesterday. AIG pays out bonuses. They are earned based on contracts between the employees and AIG. As long as AIG stays in business (bailouts anyone?), they are obligated to pay the bonuses. Once AIG files Chapter 11, files for bankruptcy, those contracts – like the UAW contracts for General Motors – are all up for renegotiation. The bailouts by the feds forced the bonuses to be paid. Once again, the kleptocrats in DC are complaining about something they broke. So what else is new? Sounds like yet another round of bread and circuses from President Teleprompter.
First, we should be clear that AIG should have been allowed (Forced?) to go through bankruptcy. This was the “original sin”, committed by the last administration because Hank Paulson was scared of the consequences of doing this. However, now it seems clear that the consequences we have reaped can hardly be worse than what we got.
But I would like to see anyone who shriek’s “It’s Bush’s Fault!” explain why now Obama and Geithner are doubling down and expanding on Paulson’s bad bet.
Why bankruptcy? Because this is the mechanism that allows a court to void old contracts and to either renegotiate or repudiate them. Agimarc is correct, as long as AIG continues in business they are obligated to honor their contracts – Bankruptcy is the perfect and time-honored legal action that applies directly to this situation!
This administration is either too stupid or too cowardly to take the obvious, direct action which would address this situation immediately – call the $180 billion loan, which would force an immediate bankruptcy filing, void all contracts, and then take over as debtor in possession.
Of course, then they would have to take responsibility for everything that happens next, and they would actually have to manage the operation rather than just complain about it. I suspect that’s the real rub, and is probably why no matter how much faux outrage we hear on the television, Washington will simply keep writing checks ad infinitum.
Final happy thought for the day – some analysts suspect that AIG’s total cds exposure, which the US government is now liable for, may be as much as $2 trillion. I think that’s a little high; personally, I don’t think we’ll lose much more than $1 trillion in that particular black hole. Recall that AIG, which we now own, lost $62 Billion in just the last 3 months of 2008. “Better” is going to be defined as getting to where the company only loses $10 billion per month instead of $20B. What a great “investment.”
Anyone still think that any of this money will ever be paid back to the US? Oh, but at least the European banks and Goldman Sachs have made tens of billions of dollars from it in the last 6 months.
“Since September 16, AIG has sent $120 billion in cash, collateral and other payouts to banks, municipal governments and other derivative counterparties around the world. This includes at least $20 billion to European banks. The list also includes American charity cases like Goldman Sachs, which received at least $13 billion. This comes after months of claims by Goldman that all of its AIG bets were adequately hedged and that it needed no “bailout.” Why take $13 billion then? This needless cover-up is one reason Americans are getting angrier as they wonder if Washington is lying to them about these bailouts.”
http://online.wsj.com/article/SB123725551430050865.html
And what about all the money paid the execs at Freddie and Fannie who perpetuated the lending crisis.
Congress didn’t hesitate passing their cost of living increase either.
The fact is most people don’t even understand how the bonus structure for many of these companies works. Many of the people receiving bonuses have nothing to do with the strategy and selling decisions their companies made and do the mundane back office work. Bonuses are a huge component of their all in salary.
Once again Washington and the MSM trying to paint someone else as the boogie-man.
And if I hear about another wasted penny going to education in this country I am gonna puke. Enough’s enough already—–hold all those SOBs accountable too.
Remember that Obama has two hands, what he gives with one, to score political points, he takes away with the other. In the stimulus package rushed through congress, that few read, he sanctioned the giving of bonuses to AIG members. His very own guy, who was indispensable to Treasury, even though he was a tax cheat, wrote the bail out for AIG. So what is all the fuss about now? Really it is political grandstanding. It is a big lie. We the people need to dig and watch, because nothing is as it appears!
just ran across one of the best stories on this topic yet.
What to know why AIG has no choice but to pay these bonuses?
Because Sen. Chris Dodd put language to that effect into the $787 Billion scamulous bill, and Obama signed it. Apparently the great show of outrage is meant to try and cover up this “inconvenient truth.” Who took more campaign money from AIG than anyone else? Sen Chris Dodd. Why is Dodd proposing this tax now? Because he know’s it’s unconstitutional and cannot pass, but it might make enough noise to hide the fact that he is personally behind the payouts.
“Senator Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group bonus recipients so the government could recoup the $450 million the company is paying to employees in its financial products unit. Within hours, the idea spread to both houses of Congress, with lawmakers proposing an AIG bonus tax.
While the Senate constructed the $787 billion stimulus last month, Dodd unexpectedly added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009,†which exempts the very AIG bonuses Dodd and others are seeking to tax. The amendment is in the final version and is law.
Also, Sen. Dodd was AIG’s largest single recipient of campaign donations during the 2008 election cycle with $103,100, according to opensecrets.org.
Dodd’s office did not immediately return a request for comment.
One of AIG Financial Products’ largest offices is based in Connecticut.”
http://www.foxbusiness.com/story/markets/industries/finance/dodd-cracks-aig—time/
The entire administration is a disaster. Happening. Along with the all the congress critters.
Yup, Dodd is trying to play both sides of the fence. He crafts legislation that forces AIG to pay the bonuses, then raises holy heck about them when it comes time to pay them.
I believe Dodd is in serious trouble with his voters. Thankfully, he isn’t likely to be around after his current term expires. There is plenty of grease already on that rail out of Washington.
The Democrats better do their damage while they still can because they aren’t long for being in control in DC.
Well, this is just typical of the entire subprime lending issue. It was the Democrats who pushed that too, because they were more interested in cheap housing than they were balancing the books. They say one thing and do another.
I saw this over at The Anchoress :
Similarly, two weeks ago, Citi was said to be “in very bad shape.†This bad shape was the reason for another infusion of bailout money in February. Their stock price below $1.25 per share. And, now suddenly, Citi reports a $6.8B profit for January and February. Both Bank of America and Wells Fargo are hinting at similar good news on their balance sheets. (A pal at WF has said they’re still working lots of overtime like it was last October.) Something is not right. Also, the Bush DOJ had begun a criminal inquiry in December/January to determine who began the electronic run of $550B last September. Since the change in administration, the investigation seems to have fallen out of sight.
Plenty of “hmmm …†at play.
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Does anyone know anything about this investigation?
Don’t ask too much about that investigation, Terry. We don’t want you to be “disappeared” anytime soon. 😉
I don’t know if anyone on this board realizes that AIG is holding almost all the 403-B retirement savings. 403-Bs are the same pretty much as 401-Ks-retirement savings for the non-profits. If AIG had been allowed to fail mega people would have lost their retirement savings. Or should I say more we have already lost.
The reason Citi, Bank of America and Wells Fargo had an upswing is that they are charging their customers extremely high interest rates. They should NOT be patted on the back for this. They are a big part of the problem with the economy doing this.
BarbaraS, not only that, had AIG cratered, so would most of Europe. AIG is a big player there aside from owning Manchester United.
From the article I linked above:
“AIG Europe says that it provides insurance to more than 85 percent of the European companies on the European FT 500,”
So if AIG failed, so would Europe.
WWS:
I would be hard to disappear.
I hope.
[…] President by paying over $100 grand. Then President Obama gets into office and he and Senator Dodd (who also got paid over $100 grand by AIG) fork over billions of dollars of OUR money to AIG, who then pays out million dollar bonuses to […]
If AIG failed, the entire world’s economy would fail, this is why it was saved, this is why there is not a 1932. Obama is so stupid that he used this crisis to push all the other billions in domestic spending without telling the people the importance of the bank bailout. My question is how is he going to give more to the banks now that he has stoked the hatred for Wall Street. I hope he has a plan.
Kathie – look at the obvious corrolary to what you and others have just stated. Yes, AIG insures Europe and the rest of the world against failure.
By taking ownership, the US Govm’t is now insuring Europe and the rest of the world against failure. You – the US Taxpayer – is now insuring the rest of the world against failure.
Insurance depends on recieving premiums first – the taxpayers have recieved nothing but liabilities. This is a deal in which the US taxpayer is *GUARANTEED* to lose. There is no possible set of circumstances in which this works out well for taxpayers – which is why the only viable course of action for the government is to continue to lie about just how big the liabilities are.
And look at Europe – they are in worse shape than we are, and their institutions are continuing to fail. US Taxpayers are now on the hook for ALL of the failures world wide!!!
How long do you think you can keep paying this bill???
“After all, it’s OUR money!” AHHH! That’s where you are making your mistake. Money does not belong to those who earn it. Money belongs to Big Brother. Money and everything else of any value. We as American citizens are simply given the privilege of using that money for a certain period of time…until tax day, for example. For crying out loud, wise up!!
Just to prove to you all that I’m not an Obama/partisan hack that ignores or attempts to justify his mistakes just because he is a Democrat, unlike AJ and many on this site continually did for Bush when he was president, I think the blame for the executive compensation amendment rest squarely on the Obama adminsitration, not Dodd. Dodd’s original amendment did not include any exceptions. It was Tim Geithner and Larry Summers who protested and pressured Dodd to make it prospective so it didn’t apply retroactively to existing contracts.
Dodd even claims he didn’t add or know about the exception, the truth of which is still unclear. Regardless of what Dodd actually knew about, the Obama administration is unfairly attempting to blame Dodd for something that Treasury pushed.
Here is a link to a good Salon post on this issue. Yes, I know you normally don’t read anything from Salon because you assume anyone that doesn’t agree 100% with your ideology is a lair, but you really ought to read this piece because it actually says what you want to hear. http://www.salon.com/opinion/greenwald/2009/03/17/dodd/index.html
Since I’m fairly certain that nobody will remember or point it out on this blog, I also think it is fair to point out that Bush and the GOP were dead set against any limitations on executive compensation when TARP was being considered. http://www.huffingtonpost.com/2009/03/18/flashback-it-was-bush-gop_n_176442.html So the Republicans expressing outrage over AIG are just as hypocritical as the Democrats.
With that being said, Obama promised “change” and his administration’s involvement in the executive compensation exemption and attempt to hide their involvement is hardly the kind of change he promised.