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:

• Contact the Broadcast Media
  
• Contact the Newspapers
  
• Contact the US Senate
  
• Contact the House of Representatives

Sources:

GDAE Podcast Episode 9, March 2009

Did I Say Matt Taibbi Rocks?

I know this is the 4th or 5th time I've written about Matt Taibbi recently, but he deserves the plaudits. This is just a quick post linking to Dusty's piece on Matt at The Sirens Chronicles.

The relevant links in her piece are captured in the opening paragraph of her post:

Matt’s latest [blog] piece is a wonderful bitchslap of the AIG carpetbaggers. He is responding to the recent NYT OpEd by one of their employees…actually former employee. Executive VP Jake DeSantis.

Matt catches Jake in a contradiction:

let's just say, Jake, that you're telling the truth, that you don't know anything about this toxic portfolio. If that's the case, then why the fuck does anyone need to retain you at an exorbitant salary to help unwind that very portfolio? If these transactions aren't and never were your expertise, then where the hell is your value here?

When I spoke to Christine Pretto, the AIG spokeswoman, and asked about those bonuses, she said that AIG needed to retain people like you in order to take advantage of your "knowledge of these transactions." So if you don't have knowledge of these transactions, what are you being paid for? Your winning attitude?

Matt doesn't usually swear that much in his columns for Rolling Stone Magazine... I guess he's a little pissed off... like the rest of us would be if we understood how seriously we've been bamboozled by the inside-crowd.

Bonuses for Hand Jobs

According to a Must Read article by Matt Taibbi, referring to whiz kids in the AIG Financial Services unit at the center of the economic meltdown:

The bonuses are a nice comic touch highlighting one of the more outrageous tangents of the bailout age, namely the fact that, even with the planet in flames, some members of the Wall Street class can't even get used to the tragedy of having to fly coach. "These people need their trips to Baja, their spa treatments, their hand jobs," says an official involved in the AIG bailout, a serious look on his face, apparently not even half-kidding. "They don't function well without them."

Extortion money is what I call it. "Pay us, or we walk, and we know where all the skeletons are hidden."

Psssst... Do Something

• Contact the Broadcast Media
  
• Contact the Newspapers
  
• Contact the US Senate
  
• Contact the House of Representatives

Sources:

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."

Psssst... Do Something

• Contact the Broadcast Media
  
• Contact the Newspapers
  
• Contact the US Senate
  
• Contact the House of Representatives