Geithner Speaks of AIG - er - AIU Bailout

This video dates back to March of this year...

Some Straight Talk For AIG Execs

This is from Gawker and it really struck my fancy. Click on the link too read the whole thing.

Jake DeSantis, an executive vice president in AIG's Financial Products Division, is doing a very good thing: He's donating his $742,000 bonus—that's after taxes, so the real number is well north of $1 million—to charity. He's also quitting AIG in a huff because he's upset that his boss, Edward Liddy, didn't do enough to defend the catastrophic failure of the company's hard-working and preposterously wealthy employees.

We sympathize with DeSantis. He says he didn't engage in any credit default swaps nonsense. He says his business unit was "consistently profitable" for the company, that he was working for a $1 annual salary, and that he's been spending "10, 12, 14 hours a day" trying to save the company. He even lost "a significant portion" of his life savings and "personally suffered from [AIG's] controversial activity—directly and indirectly with the rest of the taxpayers." He was repeatedly promised a gargantuan bonus in exchange for these hardships, and now his employer has abandoned him and attorneys general are demagoguing him. So he's washing his hands of the whole thing.

What he doesn't understand is that the blood-boiling rage that's been aimed at him and his colleagues isn't just about the money and the failure—it's about the vast and bottomless sense of entitlement that well-heeled Wall Streeters can't seem to shake. When he describes the AIG retention contracts as "ethical and useful," and when he compares himself to a "plumber" being "cheated" of his payment because an electrician burned down the house, he seems to be discovering for the first time that life is not fair. Also, he fails to understand that in this case, the humble plumber works for the electrician who burned down our house.

Most people who earn less than $700,000 a year have understood for some time that life is not fair. It's a hard lesson to learn, and it's generally a good idea to speak out in the face injustices large and small. But when the economy is cratering because of the company you work for, and unemployment is heading to double digits and everyone is scared out of their wits, to complain about how hard you work and make a show of being wealthy enough to turn away $742,000 is not the note you want to hit. You are not a plumber, Mr. DeSantis. You are a fabulously wealthy and fortunate man, and you ought to appreciate that and give your money away, if that's what you want to do, without aggrandizing yourself in the process.

The Big Takeover

I really like Matt Taibbi's writing - he seems well organized and well thought out. I've quoted him before - and now he's just publishing another great article in Rolling Stone. Click the link if you want to read all of it - but here's a few quotes...

It's over — we're officially, royally fucked. No empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
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In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
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So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream.

AIG Is A Nightmare In Our Economic Recovery

Mother Jones does a pretty good job of explaining some of the complexities of the AIG bailout - and why the government is probably not done with this job. Click the link to read more.

The reason that taxpayers have had to prop up AIG to the tune of $173 billion is that AIG is now basically a conduit—it owes money to so many other companies that the cash just pours right through. If AIG doesn't pay its counterparties—the entities on other end of its bad bets on the subprime mortgage market, the counterparties might go belly-up, too. That's why the bailout of AIG is sometimes referred to as a "backdoor bailout" for other companies. The people and companies on the receiving end of the "backdoor bailout" are AIG's counterparties, and so far, the Treasury and the Fed have been keeping their names secret. Now the Project on Government Oversight (POGO) is trying to change that.

Why Are We Bailing Out AIG?

Mostly because it is one of the world's largest insurance companies and it has insured many of the banks around the world that are at the heart of the financial crisis. If AIG goes under, it might be the first domino in a long string of failures. Here's some more interesting stuff on the bailout from Gawker (click the link to read more).

Where are insurance giant AIG's bailout billions really going? The White House doesn't want to tell us. But the Wall Street Journal, bless its Rupert Murdoch-owned heart, found out anyway: Foreign banks, lots of them!

The Federal Reserve began propping up AIG last September; a recent $30 billion infusion has brought the total bill to $173 billion. The government now owns 80 percent of the many-tentacled insurer, meaning that taxpayers are essentially on the hook for its liabilities. And AIG has spent roughly $50 billion fulfilling contracts it issued to banks to guarantee the value of various derivatives. Those complex financial bets went disastrously wrong as first the mortgage business and then the entire stock market imploded. U.S. legislators have been asking administration officials for names all week after the Treasury . They refused. But the WSJ got them:

Goldman Sachs
Deutsche Bank
Merrill Lynch
Société Générale
Calyon
Barclays
Rabobank
Danske
HSBC
Royal Bank of Scotland
Banco Santander
Morgan Stanley
Wachovia
Bank of America
Lloyds Banking Group

Ah yes, Rabobank, that pillar of the American economy.

Republican's Are Nasty SOB's

You can argue that the AIG bonuses are an outrage - that executives from a company that has lost over $100 billion and cost taxpayers an equal amount do not even deserve to be employed at that company, let alone be paid bonuses. Obviously there were some pretty badly executed contracts with the executives if the bonuses weren't contingent on a successful year for the company, but is that any excuse for calling for the death penalty?

If you've ever had any doubt that Republicans can be heartless, vicious bastards, then let that doubt vanish now. The following report is from Progress Report, 3/17/2009.

RADICAL RIGHT -- CONSERVATIVES SUGGEST DEATH FOR AIG EXECS SET TO RECEIVE BONUSES: Politicians and pundits from both sides of the aisle have expressed outrage at the recent news that bailed-out insurance giant AIG will be paying $165 million in bonuses to same executives that "brought the company to the brink of collapse." President Obama and members of Congress are trying to figure out a way to revoke the bonuses, while others have called for top executives to be fired. While conservatives have joined in the mass discontent with AIG, some are taking their anger a bit too far. Yesterday on a local Iowa radio show, Sen. Charles Grassley (R-IA) suggested that AIG executives consider committing suicide. And last night on Fox News, far right pundit Charles Krauthammer and his milder counterpart Mort Kondracke argued that some should be put to death. "I would be for an exemplary hanging or two. Have it in Times Square, invite Madame DuFarge. You borrow a guillotine from the French and we could have a party," Krauthammer exclaimed. Kondracke agreed. "I was going to recommend boiling in oil in Times Square, but look, because these are the people who invented these crazy credit default swaps that are leading to the whole disaster," he said.

Headed for Jail?

After Bailout, AIG Executives Head to California Resort.

This report comes from ABC news which also has a video. There's outrage in Washington and around the nation over this.

Click the link or the image (at right) to link to the ABC posting of both story and video.