January 12, 2010

Remembering AIG

Bill Moyers asked in 2009, "Are we chumps?" Former chief IMF economist Simon Johnson responded saying that depends on how we react, in other words, it depends on whether or not we let the investment bankers get away with it.

The following observations on AIG is a reminder not to let them get away with it.
  1. 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?
  2. 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.
  3. Most of the money going to AIG is actually going to.... the huge financial institutions, Citigroup, Bank of America, Goldman Sachs. Thus, 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?
  4. 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."
  5. I heard a disturbing idea from Brian of WakeUp AM blog.... 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."
  6. 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, Obama's 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."
That last point is prime material for the Challenge the Establishment blog, which often probes the ills of Republicrats.

For Your Convenience:

GDAE Podcast Episode 9
, March 2009