No One At White House Realizes President is De Facto CEO of AIG

There is much hand wringing and continual cries of “outrageous” from the Obama Administration over the AIG bonuses. Mere displays of consternation are not going to be enough to still the righteous fury of the American public over the original ‘too big to fail’ company, though.

Put simply, many Americans viewed the original corporate bailout – all $700 billion worth – as inherently unfair, as a reward for the corporate thugs who wrecked the entire U.S. economy.  I fear this issue of $165 million in bonuses could be like an interception thrown deep in an opponent’s territory — a momentum crushing political game changer for the president.

The video at the end of this post, I believe, shows the disconnect.  White House aide Austan Goolsbee is interviewed by Chris Matthews on Hardball.  Goolsbee comes across as insincere in his pique with AIG.  He says the president is outraged, the Treasury Secretary is outraged, blah, blah, blah.  He is seemingly exuberantly outraged himself, saying by God, these AIG guys shouldn’t be allowed to have a meal out in a restaurant let alone those poor taxpayers’ money!  Frankly, it looks like an act, it feels like an outrageous act.

The Obama Administration is talking about – I don’t know if it’s policy yet, or what it will take to make it policy – allowing local judges to change the terms of mortgages between homeowners and their lenders.  This sounds an awful lot like jimmying with contracts.  On the other hand, the Obama Administration is playing the outrage game over AIG’s use of bailout money – mugging for the cameras – yet shaking their heads, looking at their shoes and saying, “You know, it’s these damn contracts … these guys have us over a barrel.”

Here’s a question for Washington: When does our 80% stake in this pathetic company begin to mean something.  Doesn’t 80% ownership give the American people – through their elected representatives – a say?  Isn’t the President Obama or Secretary Geithner the de facto CEO of AIG?

No more conspicuous displays of outrage over the likes of AIG, please.  Just do something, and at this point letting the whole damn company collapse would be as good as pulling the plug on the pigs’ bonuses.

Transcript: President Obama Talks About AIG Bonuses Today at White House

(The following is the section of the President’s remarks on small business where he diverted to discuss his displeasure with the AIG situation. Source: White House Press Office)

THE PRESIDENT: Now before I talk about the new steps we’re taking to get credit flowing to small businesses across our country, I do want to comment on the news about executive bonuses at AIG. I think some of you have heard a little bit about this over the last few days. This is a corporation that finds itself in financial distress due to recklessness and greed. Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?

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State of Ohio Received Some of AIG’s Bailout

You can add $490 million to Ohio’s federal stimulus total.

That’s the amount Ohio has received from AIG since the federal government put the world’s largest insurer on life support last fall. Sunday evening AIG released information regarding how it spent over $70 billion of the $180 billion it has received from U.S. taxpayers through the U.S. Treasury Dept. and the Federal Reserve.  Ohio and several other states were on the list of businesses or government entities for which AIG used federal funds to settle debts.

From AIG’s press release on Sunday:

Municipalities in the states listed on Attachment C received a total of $12.1 billion from AIGFP between September 16, 2008 and December 31, 2008 in satisfaction of Guaranteed Investment Agreement (GIA) obligations. GIAs are structured investments with a guaranteed rate of return. Municipalities typically use GIAs to invest the proceeds from bond issuances until the funds are needed.

Screen Grabs from Attachment C:

This Is Retarded. Twitterviews? Give Me A Break …

I don’t think I have to say a thing about this:

The Daily Graphic BONUS: Choose From Four Printable NCAA Tournament Brackets – ESPN, Sporting News, CBS Sports, USA Today

2009 NCAA Men’s Basketball Tournament Printable Bracket from The Sporting News

2009 NCAA Men’s Basketball Tournament Printable Bracket from ESPN

2009 NCAA Men’s Basketball Tournament Printable Bracket from CBS Sportsline

2009 NCAA Men’s Basketball Tournament Printable Bracket from USA Today

Keeping the Blowhards on the Right Honest on Obama and the FDA

A second Sunday in a row working in the yard with WTVN-610 in the background.  Between 12 and 3 p.m. on Sundays is a show called the Radio Deli with Dirk Thompson.  Thompson is a Libertarian and is actually quite funny.  When he’s not on the air he says he spends his week in his “sub-basement, wrapped in tin foil.”

There are a lot of things Dirk could be banging on Washington against but President Barack Obama’s bolstering of the federal Food and Drug Administration isn’t one of them.

Yesterday, Obama delivered his entire weekly address on food safety and the leadership of the FDA.  Thompson railed for the final hour of his show today about several things, one of them being “more regulation” by the FDA.  I would encourage Mr. Thompson to follow the link above and read what the president said.  He didn’t say there were a bunch of new rules being written.  The main thing he said was that we will increase the number of inspectors – a number that consumer advocates have said has been woefully inadequate for years.

Here are the three policy points the president made regarding FDA yesterday:

1. Close a loophole in regulation which allows some diseased cows into the food supply.
2. Modernize the FDA’s laboratories.
3. Increase the number of inspectors out there looking for the likes of bad peanut butter and lead-tainted products from China.

Now reasonably, can anyone argue with this?

Media – How Does It Feel To Be Managed Through the AIG Bonus Story

One thing I haven’t heard today regarding the over $100 million dollars the pigs at AIG are going to bonus themselves is any pushback at the company or at the U.S. Treasury Dept about they were managed through this thing.

There’s an old expression among flaks which goes something like this: “You take the trash out at 5 p.m. on Friday.”  Treasury Secretary Geithner did us one better this week with the AIG bonus story – Treasury took the trash out at around 8 p.m. Saturday night.  Taking the trash out means dumping the story you don’t want to have to talk much about when the media – and the public – are least attentive.

In reading through the dispatches today and watching the talking heads this a.m., it’s obvious Treasury knew what was up last Wednesday.  That is, last Wednesday Geithner and his lawyers realized they were punk’d by Ed Libby and AIG’s lawyers.  I can just imagine the final, behind the scenes discussion.  Tim Geithner, Wall Street Insider, asks AIG, America’s largest welfare case and Wall Street Personified, “Can we hold this til the weekend?  I’ll be out of the country and this will all blow over by Monday …”

Whether you are liberal or conservative, you’re job is to not let this blow over.  AIG are some of the guys who put the whole nation at economic – and therefore geopolitical – risk.

Today, one of the Administration’s talkers said we’re in something akin to wartime footing with regard to the economy.  While President Obama reads up on his Abraham Lincoln or FDR, he might take note that during a time of war the Executive Branch has been upheld in suspending some laws.  Perhaps AIG’s “contractual obligations” to the slicksters and scam artists in it’s financial services division could be declared null.

Full Text: AIG CEO Ed Liddy’s Letter to Treasury Secy Timothy Geithner on AIG Bonuses

Larry Summers: Geithner Doing All He Can on AIG Bonuses

Larry Summers appeared on ABC’s This Week with George Stephanopolous.  Select quotes:

“There are a lot of terrible things that have happened in the last 18 months, but what’s happened at AIG is the most outrageous,” said Summers, chairman of the White House National Economic Council, during an appearance on “This Week” Sunday.

“What that company did, the way it was not regulated, the way no one was watching, what’s proved necessary, it is outrageous,” Summers said.

“We are a country of law. There are contracts. The government cannot just abrogate contracts. Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system,” Summers said.

“What the Obama administration has done, based on the advice of attorneys, is done everything that it can to, within the law and within the tradition of upholding law that we have in this country, to limit these bonuses. And they have as a result of Secretary Geithner’s efforts been scaled back,” he said.

My take:  The game changed when the company began taking our money.

Ohio Sunday Papers – Casinos: State Newspapers No Likey

• Huron County’s 18.3% unemployment rate – Associated Press
• State making more records available online – Columbus Dispatch
• Banks face long climb – Cincinnati Enquirer
• New Schools Fall Short of Strickland’s Standards – Columbus Dispatch
• Editorial: Fool’s Gold (Casinos) – Toledo Blade
• Editorial: False Promises (Casinos) – Columbus Dispatch
• Editorial: Highway Funds, er, Safety – Toledo Blade
• Editorial: Strickland – Let Charter Schools Bloom – The Plain Dealer
• Editorial: Trust in Change (Higher Ed) – Akron Beacon-Journal
• Op-Ed, Dennis Willard: Big Brother, Big Brother, big money – Akron Beacon-Journal
• Op-Ed, David Skolnick: Congressman Ryan Man of the Hour – Youngstown Vindicator
• Op-Ed, Thomas Suddes: Gambling Promoters & Their Self Serving Ideas – The Plain Dealer
• Op-Ed, Jonathan Riskind: Pollution plan fuels bipartisan fight – Columbus Dispatch
• Op-Ed, Joe Hallett: Ohio needs to upgrade Capitol statuary – Columbus Dispatch

The Daily Graphic: Drill Baby, Drill is Over Baby, Over

Good story over at the New York Times on the slowdown in oil drilling and exploration as energy prices have fallen off the cliff over the past several months.

AIG Headlines From the Blogosphere – Not Pretty

• AIG Execs Who Ruined Company to Get $165 million in Bonuses – Huffington Post
• Al Qaeda Hurt Us For A Day. AIG Has Destroyed Us for a Generation. – Verbal Paintball
• Treasury Boldly Adds “Sugar on Top” – Driftglass

(UPDATED 1) Totally Unbelievable: AIG to Pay Out $100 Million in Bonuses To Its Financial Products Division

I am so angry right now, I can’t see straight and I may not be thinking clearly.

President Obama, this crap has got to stop.

The New York Times is reporting tonight that AIG, the world’s largest insurer and the original company deemed “too big to fail” will be paying out $100 million in bonuses shortly.  The government of the United States has shoveled $170 BILLION in AIG’s coffers since last fall in an effort to keep the company afloat.

A once venerable insurer, AIG began gambling on Wall Street some time ago in the credit default swap market.  These financial products, which are essentially insurance, are unregulated by the U.S.  According to multiple accounts in the media since last September, AIG is thought to have guaranteed trillions of dollars in these swaps.

Essentially, in a credit default swap, one party – the insurer – guarantees it will cover the full original value of a financial deal.  The purchaser of the swap pays a “premium” which is usually a percentage of the amount being guaranteed.  In the case of the current economic crisis, the financial deals being covered in these insurance gambles were the bundles of good and bad home loans – mortgage backed securities.  Companies like AIG thought they were raking in free money because, they believed, housing prices would continue to rise.  The housing bubble burst, the underlying bundles of loans became worthless and the swap purchasers are demanding their “insurance” settlements – the original values of the bundles of mortgages.  AIG and other financial institutions who sold credit default swaps don’t have the cash to make good on their obligations.

I fully understand “priming the pump” and the need for increased government spending to kick start a stalled economy.  I do not understand the unaccountable, opaque bailouts of private corporations.  I do not understand the total lack of accountability and justice for the companies like AIG who brought this mess down upon us.

The Times reports:

An official in the Obama administration said Saturday that Treasury Secretary Timothy F. Geithner had called A.I.G.’s government-appointed chairman, Edward M. Liddy, on Wednesday and asked that the company renegotiate the bonuses.

Administration officials said they had managed to reduce some of the bonuses but had allowed most of them to go forward after the company’s chief executive said A.I.G. was contractually obligated to pay them.

In a letter to Mr. Geithner, Mr. Liddy wrote: “Needless to say, in the current circumstances, I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”

Geithner “asked that the company renegotiate the bonuses?”  Are you fucking kidding me?  Geithner should have demanded that the bonuses not be paid.  Administration officials are actually taking this crap that AIG is “contractually obligated” to pay these pigs for screwing every single American taxpayer?  This financial crisis is a national emergency – I would expect that after $170 billion thrown down AIG’s maw we would have more leverage than to roll over because of a contractual obligation.  Where are the lawyers?

The one major disappointment I have with the Obama Administration is that the change we were promised is so far merely nibbling around the edges of the financial crisis.  For all of my conservative friends out there who wring their hands every time the word ‘nationalization’ comes up, this circumstance is what nationalization may cure.  This is our money being given to greedy pigs who are held harmless from the havoc they’ve wrought.  Temporary nationalization of these big companies would at least give our government control to go in and clean house.

If we don’t have the political will for nationalization or to hold Wall Streeters accountable, then it’s time to begin letting these companies go bankrupt.  Half the country seems to want this purity of the marketplace, give it to them.  If AIG were in bankruptcy, I believe these contractual obligations would go by the boards.

Update: 1 a.m. Sunday

The current version of the NYT story is now different from the block quote above.  I’ll bet there was some screaming from the Administration about Geithner ‘asking’ AIG to renegotiate bonuses.  The newer version of the story has Geithner portrayed as more forceful.  However, that doesn’t change a thing.  The newer version also points out that the U.S. government (us/we) own 80% of AIG.  If that’s the case, someone needs to have the stones to put a stop this sort of behavior.  AIG is not playing with their money now, they’re wasting ours.

From the Times:

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

A.I.G., nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.

Add Condom Sales to Recession-Proof Business List

From the Columbus Dispatch on Saturday:

Nationwide, sales of male contraceptives in food, drug and mass-merchandise stores increased 6.4 percent in the last 13 weeks of 2008 compared with 2007, according to the Nielsen Co., which tracks products.

Nielsen also counts how many condoms are sold, and that number went up 2.4percent in the same period.

The trend continued in January, with sales up 5.3 percent compared with the previous year and per-unit sales up 1.6 percent, Nielsen found.

Condom sales are pretty much recession-proof, said Carol Carrozza, vice president of marketing at Ansell Healthcare in Red Bank, N.J. Ansell is one of the largest manufacturers of condoms in the world.

“In this time of fear, people tend to be coupling more,” Carrozza said. “There’s a nesting effect, and people are staying home.”

Reluctance to have children in uncertain times also adds to the condom boom, she said.

The piece also dealt with Hilliard, Ohio condom entrepreneur Brian Frank.  His business, Undercover Condoms, has had a “rise” in sales even though the economy is “flagging.”

If you want to wrap your rascal, or your mate’s, go visit Undercover Condoms.  Buy Ohio!

What Would You Do if Your Budget Increased 10x?

According to an article in today’s Plain Dealer, the first stimulus money to begin reaching Ohio poses an interesting dilemma for the state’s community action agencies – how do you effectively spend it all?

… Ohio is concerned that local, nonprofit community action agencies – where the $267 million will end up – will not have the capacity to spend such an enormous amount of money over the next two years.

Before the federal stimulus package, Ohio would have received about $21 million for this program, said Mark Shanahan, energy adviser to Gov. Ted Strickland.

“We are looking at what the new federal rules are and whether we can use up to 20 percent of the money for job training,” he said. …

The $267 million being talked about is Ohio’s amount from the U.S. Dept. of Energy to do energy efficiency upgrades in the homes of the elderly, low and middle income earners.

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