March 23, 2009

Looking Back on the AIG Buzz

A few reflections on the last couple of week's frenzy over the American Insurance Group (AIG). I don't want to dwell on the AIG issue because it is getting so much attention elsewhere. Only a few brief points:
  • AIG's insurance of exotic Wall Street derivatives helped give the false sense of security that allowed the financial industry house of cards to grow so astoundingly large, ... where were the regulators?
  • The argument that bonus contracts are sacrosanct is bogus on two levels: First, the sanctity of contracts is applied hypocritically to the white collar financial industry, but not blue collar auto industry... an industry that actually produces something tangible. More important, AIG is effectively bankrupt and survives only because tax-payers are propping it up. AIG should be treated like a bankrupt corporation and the contracts should be voided.
  • Most of the money going to AIG is actually going to.... the huge financial institutions, Citigroup, Bank of America, Goldman Sachs, So A) the dollar figures of tax-payer bailout funds you hear begin quoted for these monopolistic banks should also count the pass-thru money going to them via AIG. And B) Why are our tax dollars going to pay the insurance on bad gambles? ... insurance payments on gambles that, under further investigation, might actually be founded on fraudulent financial actions?
  • If you're not angry enough already, DemocracyNow reports:
"As AIG faces the loss of its bonuses, it’s quietly filed a lawsuit to recoup more than $300 million in what it says are overpaid taxes. The company says it overpaid the government in charges for using offshore tax havens. The suit effectively means AIG is using US taxpayer money to sue its majority owner, the US taxpayer. The government owns an 80 percent stake in AIG following its $170 billion bailout."
  • I heard a disturbing idea from Brian of WakeUp Am Podcast.... he posits that all of these bonuses, not just to AIG, smell like hush money.... You get your million-plus and promise not to talk about what you know.
  • Finally, a disturbing AIG factoid: Again from Democracy Now:
"A top Obama administration official is coming under scrutiny for his ties to AIG. Richard Holbrooke, the US special envoy to Pakistan and Afghanistan, served on AIG’s board from 2001 until early last year. Holbrooke is believed to have collected up to $800,000 during his AIG stint."


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5 comments:

libhom said...

Damn. I want to be on a Board of Directors. That's big bucks.

The Future Was Yesterday said...

"AIG should be treated like a bankrupt corporation and the contracts should be voided."
Finally!! Somebody with a brain that isn't out of order.
"smell like hush money.... You get your million-plus and promise not to talk about what you know. "
This whole "bailout" thing is starting to smell like what we use the bathroom for......

GDAEman said...

LH It's never too late for a career change :-)

toronto realtor said...

"... where were the regulators?" Exactly what I've been thinking! Where was the state when AIG was growing and growing until it got to the size "too big to fail"? Nothing should be too big to fail, because than the bad players simply stop existing while the good ones continue to do business. But if something is this big, then...

What I mean is that it should be made illegal to get this big. End of story.

Julie

The Chatman said...

I'm all AIG'D out! What else can be said! Lowlifes each and everyone of them. What goes around, comes around. I just hope it comes REAL soon!!

Chatman