Mar 19, 2009

Need a Villan on AIG, Look No Further

In a complete reversal, Sen. Chris Dodd admitted he inserted language into the stimulus bill allowing $165 million in bonuses to those AIG executives. But he's crying that the President made him do it!

Dodd, chairman of the senate banking committee, finally admitted to CNN (see clip) that his stimulus amendment allowed the universally-reviled bonuses, which went to the very AIG executives responsible for tanking the company.

The Obama administration asked him to put the bonus language in, and Dodd was afraid all other executive compensation limits would be stripped from the stimulus package if he didn't comply. He didn't do it because, you know, AIG executives and political action committees donated all that money to the Connecticut Democrat.

It looks like there's some actual truth behind this buck passing; following Dodd's admission, the president said at a town hall meeting in California, "I'll take responsibilty. I'm the president."

Also, "a Treasury Department official told CNN the administration pushed for the language."

Which points another finger at Treasury Secretary Tim Geithner as the one who pushed Dodd to allow the bonuses. That would make sense; at the New York Federal Reserve, Geithner served as a bridge between Wall Street and federal monetary regulators. Top finance executives like Jamie Dimon of JP Morgan Chase sat on his board.

Geithner was also said to be instrumental in arranging the bailout of Bear Stearns — and of AIG.

Geithner has been an embarrassment to Obama. You'll remember he's a tax cheat. Then there was his disastrous bailout press conference, lacking the rich details promised by no less than the president himself the day before.

Now comes evidence Geithner was instrumental in allowing most outrage-stirring act of corporate greed in some times. It seems likely Obama's "complete confidence" in Geithner will be transformed into the Treasury Secretary's inevitable firing even sooner rather than later?

Cap'n's Bottom Line: Remember, being pissed about the government ALLOWING bonuses to be paid after a failed company has been nationalized is one thing. Thinking that the government can tear up a contract just because it feels like it is another thing all together. Focus your resentment and anger at those who wrote the bill, not the folks got the cash.

Doesn't matter anyway. We're all going back to subsistence farming in a few years anyhow. Enjoy all this "stuff" while you can.

2 comments:

Anonymous said...

Thomas Gober, a former Mississippi state insurance examiner who has tracked fraud in the industry for 23 years and served previously as a consultant to the FBI and the Department of Justice, says he believes AIG's supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being "healthy," as state insurance regulators, ratings agencies and other experts have repeatedly described the insurance side, Gober calls it "a house of cards." Citing numerous documents he has obtained from state insurance regulators and obscure data buried in AIG's own 300-page annual reports, Gober argues that AIG's 71 interlocking domestic U.S. insurance subsidiaries are in hock to each other to an astonishing degree.

Most of this as-yet-undiscovered problem, Gober says, lies in the area of reinsurance, whereby one insurance company insures the liabilities of another so that the latter doesn't have to carry all the risk on its books.

Anonymous said...

Republicans Yesterday: Democrats didn't stop AIG bonuses. We are outraged.

Today: Democrats are trying to stop AIG bonuses we are outraged