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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After A Weekend of Bad Press, Obama Officially ‘Outraged’ Too

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.”

Transcript: DICK Cheney Interview with CNN’s John King – Cheney Says Obama Choices Create Risk

(Source: CNN)
Aired March 15, 2009 – 09:00   ET

JOHN KING, HOST: I’m John King, and this is our STATE OF THE UNION report for this Sunday, March 15th.

President Obama urges absolute confidence in the struggling economy, but can the country afford his ambitious plans? We’ll ask the former vice president, Dick Cheney, who joins us for his first television interview since leaving office.

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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.

(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.

Obama Administration Will Increase Food Safety Inspectors

For years, critics of the Food and Drug Administration have shouted from the rooftops on the need to increase food inspectors.  It appears the Obama Administration will be doing just that.

In his weekly address today, President Barack Obama said:

As part of our commitment to public health, our Agriculture Department is closing a loophole in the system to ensure that diseased cows don’t find their way into the food supply. And we are also strengthening our food safety system and modernizing our labs with a billion dollar investment, a portion of which will go toward significantly increasing the number of food inspectors, helping ensure that the FDA has the staff and support they need to protect the food we eat.

When we argue over the proper role of government in society, sometimes it’s the obvious things that get left behind in the political battles.  With multiple issues with Chinese products and one of the largest producers of peanut products in the country is found to have serious health problems in two of its plants, who is supposed to protect our safety?  The Bush Administration knew there weren’t enough inspectors to adequately cover all the bases.  One has to ask why wasn’t this action taken at the White House level months ago?

To all of my “tea-partyin’” friends out there, this sort of thing is what we’re talking about when those of us who voted for President Obama speak of change.  Today’s action is a prime example of government priorities shifting from being a door mat for big business and begin serving the American people – all of them – once again.

The Obama Effect: Dow Having Best Week Since November

O.K. – the above headline is just as stupid as the right wing bloggers’ headlines have been since January.  I just thought I’d throw one out there for our team.  The truth about the market this week, I fear, is that this merely a bear rally.  However, I’m intrigued by profitability in some of the biggest banks (so they say).  I’m troubled by China‘s premier calling us (U.S.) out today.  It’s been a great week, but there’s still one helluva recession to slog through.

Obama Answers Question on Seeming Disagreement With Strickland on Charter Schools

President Barack Obama was interviewed this week by a group of regional newspaper reporters, including Stephen Koff of the Cleveland Plain Dealer.  During the interview the subject of charter schools, and specifically the seeming divergence of opinion between Obama and Ohio Gov. Ted Strickland.  The transcript does not identify the questioners by name, but perhaps this was Koff’s?

(Source: White House Press Office – Partial Transcript Below)

QUESTION:  Mr. President, yesterday you called for eliminating restrictions on the number of charter schools while enforcing some vigorous standards. In Ohio, the Governor has called charter schools a destructive influence on public education, a few years ago tried to have a moratorium on new charters, now wants to cut state spending by about 20 percent for charter schools and restrict some other funding. I’m wondering whether you’ve ever talked with him about this, and is this just a fundamental disagreement between the two of you?

THE PRESIDENT: You know, I haven’t had a conversation with Governor Strickland. I know that part of his concern was prompted by some bad experiences with charters in Ohio that weren’t up to snuff. And if you looked at my statement yesterday, what I said was not only should we lift the cap on charters, we should also shut down charters that aren’t meeting standards. I don’t think that’s inconsistent with Governor Strickland’s position.

My goal here is to create laboratories of innovation so that in the public school system, we are on a race to the top as opposed to stuck in the old ways of doing things. And we’ve got to — we’ve got to do that. In your home town of Cleveland, I don’t know off the top of my head what the dropout rate is, but I’ve got to assume that it’s hovering around 50 percent. If you look at the number of children going through the Cleveland public schools who are actually prepared to go to college, it’s probably one out of seven or eight or 10. And that’s just not acceptable. It’s not acceptable for them, it’s not acceptable in terms of America’s economic future. And so we’ve got to experiment with ways to provide a better educational experience for our kids, and some charters are doing outstanding jobs.

So, the bottom line is to try to create innovation within the public school system that can potentially be scaled up, but also to make sure that we are maintaining very high standards for any charter school that’s created.

Obama Signs Spending Bill, Issues Signing Statement

President Barack Obama’s administration is going to review former President G.W. Bush’s signing statements, but Obama is not giving up this presidential practice.

I’d like to read the statement Obama signed today after he signed the spending legislation, but I can’t because it’s not on his website.  The positive stuff of the day, such as an EO regarding the White House Council on Women and Girls made it up.

You can read what the Associated Press wrote about today’s events, here’s part of it:

Two days after criticizing his predecessor for issuing guidelines on how to put legislation into practice, President Barack Obama issued such a directive himself.

Out of public view Wednesday, Obama signed a $410 billion spending bill that includes billions for items known as earmarks, the targeted spending that lawmakers direct to projects in their districts. Obama promised during the presidential campaign to curb such spending.

He also issued a “signing statement” in which he objected to provisions of the bill that he said the Justice Department had advised “raise constitutional concerns.” Among them are provisions that Obama said would “unduly interfere” with his authority in the foreign affairs arena by directing him how to proceed, or not to, in negotiations and discussions with international organizations and foreign governments.

Another provision, Obama said, would limit his discretion to choose who performs specific functions in military missions.

On Monday, Obama ordered a review of former President George W. Bush’s guidelines for implementing bills passed by Congress — the signing statements.

Text: President Obama on Earmarks Reform

(Source: White House Press Office)

THE PRESIDENT: Good morning. I ran for President pledging to change the way business is done in Washington and build a government that works for the people by opening it up to the people. And that means restoring responsibility and transparency and accountability to actions that the government takes. And working with the Congress over my first 50 days in office, we’ve made important progress toward that end.

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Full Text: White House Memo to Cabinet Agencies – Scientific Integrity

(Source: White House Press Office)

MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES

SUBJECT:  Scientific Integrity

Science and the scientific process must inform and guide decisions of my Administration on a wide range of issues, including improvement of public health, protection of the environment, increased efficiency in the use of energy and other resources, mitigation of the threat of climate change, and protection of national security.

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Full Text: Obama Stem Cell Research Executive Order

(Source: White House Press Office)

REMOVING BARRIERS TO RESPONSIBLE SCIENTIFIC
RESEARCH INVOLVING HUMAN STEM CELLS

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1.  Policy.  Research involving human embryonic stem cells and human non-embryonic stem cells has the potential to lead to better understanding and treatment of many disabling diseases and conditions.  Advances over the past decade in this promising scientific field have been encouraging, leading to broad agreement in the scientific community that the research should be supported by Federal funds. Read more

Buffet Says ‘Patriotic Americans’ Will Get Behind Obama

The Bloomberg lowdown on Warren Buffett’s time on CNBC today:

“We are doing things now that are potentially very inflationary,” he said. Buffett called on Congress to unite behind President Barack Obama, comparing the economic crisis to a military conflict that needs a commander-in-chief. “Patriotic Americans will realize this is a war,” he said.

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