No One At White House Realizes President is De Facto CEO of AIG
Filed under: A.I.G., Barack Obama, U.S. Economy, U.S. Financial Crisis
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?
After A Weekend of Bad Press, Obama Officially ‘Outraged’ Too
Filed under: A.I.G., Barack Obama, U.S. Economy, U.S. Financial Crisis
I Think AIG Has the President’s Attention
Barack Obama From the Washington Post:
“Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay,” Obama said. “How do they justify this outrage to the taxpayers who are keeping the company afloat?” He said he has asked Treasury Secretary Timothy F. Geithner to “pursue every single legal avenue to block these bonuses and make the American taxpayers whole.”
Obama added: “What this situation also underscores is the need for overall financial regulatory reform, so we don’t find ourselves in this position again, and for some form of resolution mechanism in dealing with troubled financial institutions, so we’ve got greater authority to protect the American taxpayer and our financial system in cases such as this.”
Video: Ben Bernanke Interview on 60 Minutes – Depression Averted, Recovery Soon
Filed under: Bailout Bill, Ben Bernanke, Recession, U.S. Economy, U.S. Financial Crisis
Bernanke on 60 Minutes Part 1:
Bernanke on 60 Minutes Part 2:
State of Ohio Received Some of AIG’s Bailout
Filed under: State of Ohio Govt, U.S. Economy, U.S. Financial Crisis
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:
AIG Begins To Share With Taxpayers Where Their Money Is Going
Screen Grabs from AIG Slides – The four slide deck can be found here. AIG’s press release may be found at bottom of post.
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
Click for AIG Bonus Letter to Treasury
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.
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
Full Text: Larry Summers Speech, Brookings Institution, The Obama Program and the Current Economic Crisis
Filed under: Recession, U.S. Economy, U.S. Financial Crisis
(Source: White House Press Office)
I am glad to be here. This morning I want to describe our understanding of the root of our current economic crisis, talk about the rationale for the Administration’s recovery strategy, and connect our longer-term economic strategy to the central objective of sustained and healthy expansion.
Video: Jim Cramer Interview on Daily Show with Jon Stewart
Part 1:
Part 2:
Part 3:
Two Highlights from Geithner on Capitol Hill Today
Filed under: Banking, U.S. Economy, U.S. Financial Crisis
From Reuters:
GEITHNER ON BANK REPAYMENT OF GOVERNMENT CAPITAL:
“I wouldn’t give a penny to help a bank. The only thing we’re doing is we’re trying to make sure that credit is available on a scale and terms necessary for recovery to come back. There is no way we’re going to get recovery with the speed and force we need unless we do better in achieving this goal. Nothing would make me happier than to see strong banks repay the government the capital they took. And we would love to see banks go out there and replace that capital with capital from the private sector, repay us, and allow us to use that where it can be targeted next.”
GEITHNER ON AIG:
“AIG is systemic. I wish it were not the case but AIG is systemic and the least-cost way to the American taxpayer and the American people for dealing with that risk is to help this company restructure.
“The bottom line is we have to make sure, given the severity of this crisis and the fragility of the system that we do everything necessary to protect against the risk that we have a disorderly failure of a major financial institution.”
Madoff Pleads Guilty, Bail Revoked – News Roundup
- Madoff’s Bail Revoked – New York Times
Bernard L. Madoff pleaded guilty Thursday to all the charges against him and expressed remorse for a vast Ponzi scheme that bilked investors out of billions of dollars.
Standing before Judge Denny Chin in United States District Court in Manhattan, Mr. Madoff was sworn in and reminded that he was under oath. Noting that he had waived indictment, Judge Chin asked, “How do you now plead,” guilty or not guilty?
“Guilty,” Mr. Madoff responded.
His formal confession will cost him his liberty. Rather than letting him remain free on bail and return to his apartment on Manhattan’s Upper East Side, Judge Chin ordered Mr. Madoff immediately jailed as he awaits sentencing.
“He has incentive to flee, he has the means to flee, and thus he presents the risk of flight,” Judge Chin said. “Bail is revoked.”
The 11 counts of fraud, money laundering, perjury and theft to which he pleaded guilty carry maximum terms totaling 150 years.
- Madoff tells judge he’s guilty in Ponzi scheme – Bloomberg
- Madoff remanded to jail – New York Daily News
- Madoff plea troubles investors – Reuters
More Evidence Feds Don’t Know What the Hell They’re Doing in Bank Bailouts
The excerpt below is from a New York Times story about banks that wish to return their bailout money to the federal government because Uncle Sam has some thin strings attached. Numbered comments are mine …
- Signature Bank of New York has informed the Treasury it wishes to return the $120 million it received three months ago – the executives there don’t like executive pay restrictions. Question: Why did these guys get $120 million in the first place if they can just decide to give it back?
- The story reports that banks are waiting to give money back until the federal government creates a process for its return. Suggestion: Banker – write check, send to Timothy Geithner, U.S. Treasury Secretary; I think he’ll know what to do with it.
- Here’s another string the government could attach: Any bank which takes bailout money and gives it back because they don’t want to let shareholders vote on executive pay or some other weak reason should be considered to have passed a stress test and forbidden from accepting any government assistance for five years.
WASHINGTON — The list of demands keeps getting longer.
Financial institutions that are getting government bailout funds have been told to put off evictions and modify mortgages for distressed homeowners. They must let shareholders vote on executive pay packages. They must slash dividends, cancel employee training and morale-building exercises, and withdraw job offers to foreign citizens.
As public outrage swells over the rapidly growing cost of bailing out financial institutions, the Obama administration and lawmakers are attaching more and more strings to rescue funds.
The conditions are necessary to prevent Wall Street executives from paying lavish bonuses and buying corporate jets, some experts say, but others say the conditions go beyond protecting taxpayers and border on social engineering.
Some bankers say the conditions have become so onerous that they want to return the bailout money. The list includes small banks like the TCF Financial Corporation of Wayzata, Minn., and Iberia Bank of Lafayette, La., as well as giants like Goldman Sachs and Wells Fargo.
They say they plan to return the money as quickly as possible or as soon as regulators set up a process to accept the refunds. On Tuesday, Signature Bank of New York announced that because of new executive pay restrictions in the economic stimulus package, it notified the Treasury that it intended to return the $120 million it had received from the government only three months ago.
