The AIG Question

I've been listening in the background to the AIG hearing and I am not hearing enough questions like the ones Steven Pearlstein poses in the WaPo today (see also this NYTimes story on criticisms of AIG's payments to counterparties):

I suspect that when confronted with the prospect of a bankruptcy and a prolonged and public investigation, the sharpies in London and Connecticut might have been receptive to the idea of renegotiating those bonuses in favor of new contracts -- contracts that increased their base pay but tied their bonuses to success in reducing future taxpayer liabilities at AIG.

. . . A more hard-knuckled executive would have gone to the counterparties of those derivatives contracts and suggested that it would be a real shame if AIG were forced to file for bankruptcy, and offered some sort of workout.

[AIG] certainly could have been more upfront with [its] new owners -- the taxpayers -- about not only the bonuses but also the identity of the counterparties to those derivative contracts, who were the indirect beneficiaries of the government's bailout.

More . . .

To what degree is this the wishes of Obama, Geithner and Summers? Does it matter? It needs to stop now. Pearlstein writes:

[B]ecause of the bonus backlash, he has managed to put the entire financial rescue effort in political jeopardy.

To Pearlstein, that is a bad thing. I think it is a good thing because the Obama Administration has simply been awful. Its "plan," such as it is, is terrible. Bolder action has been needed for some time now. The silver lining in this AIG bonuses cloud is that the Obama Administration may have gotten the good hard shake it needed to wake up and get tough and bold regarding the financial crisis.

Speaking for me only

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    LA Times says Obama (5.00 / 3) (#1)
    by oculus on Wed Mar 18, 2009 at 12:31:37 PM EST
    wants his supporters to go door-to-door to advocate for his budget proposal.  Not sure the "shake up" message is being heard.

    What budget proposal? (5.00 / 1) (#2)
    by Big Tent Democrat on Wed Mar 18, 2009 at 12:35:52 PM EST
    OK. I'm back. Wasn't LAT, (none / 0) (#7)
    by oculus on Wed Mar 18, 2009 at 12:58:05 PM EST
    It was Sam Stein at Huff Post. Link Lucky for me, NYT is also reporting the same thing.  

    I was making a joke (none / 0) (#8)
    by Big Tent Democrat on Wed Mar 18, 2009 at 01:00:34 PM EST
    See, this is why Jeralyn (none / 0) (#9)
    by oculus on Wed Mar 18, 2009 at 01:03:42 PM EST
    wants all snark labeled as such.

    This weekend (5.00 / 1) (#5)
    by Inspector Gadget on Wed Mar 18, 2009 at 12:44:58 PM EST
    the kids will pound the pavement for Opportunity For America.

    Just for fun . . . (5.00 / 1) (#6)
    by nycstray on Wed Mar 18, 2009 at 12:50:21 PM EST
    we should have some questions ready for them . . .  lol!~

    Excellent idea (none / 0) (#14)
    by Inspector Gadget on Wed Mar 18, 2009 at 01:54:02 PM EST
    They probably have the stock answers fed to them during training, though:

    "please, go to the web site, everything is explained there." or "I'm not answering your trick questions."


    Seriously? (none / 0) (#3)
    by jbindc on Wed Mar 18, 2009 at 12:38:04 PM EST
    Like I would answer the door a) for someone I may not know, or if I did know them, then b) I'm going to sit there and listen to someone who really doesn't understand budgets explain how wonderful Obama's budget is just because it's his?

    NOW this is starting to sound a little crazy....


    Actually... (none / 0) (#10)
    by kdog on Wed Mar 18, 2009 at 01:20:07 PM EST
    I humor the Jehovahs Witnesses who come to me door and talk with them awhile...and they too try to explain things they cannot possibly understand.

    I like to think at least one of those Jehovahs over the years left my stoop questioning everything they believe:)


    Do you also humor the Morman (none / 0) (#11)
    by oculus on Wed Mar 18, 2009 at 01:22:15 PM EST

    Oh boy.... (none / 0) (#13)
    by kdog on Wed Mar 18, 2009 at 01:47:53 PM EST
    the Mormons are a lot more sure of themselves ...they get mad when you question things with too much vigor, I find the Jehovahs much more pleasant.

    I want Obama to (none / 0) (#24)
    by AX10 on Wed Mar 18, 2009 at 03:16:52 PM EST
    replace Timmy Geithner with Paul Krugman.

    Local ABC News this morning (5.00 / 0) (#4)
    by Inspector Gadget on Wed Mar 18, 2009 at 12:40:02 PM EST
    reported that 11 (eleven) of the RETENTION bonuses in amounts over $1M each went to people who no longer work for AIG.

    I want to hear questions asked that demand to know why the truth is so darn hard for these people to tell. And, an article was published that Obama, et al, knew about these bonuses for months.

    If you listened to the hearing (none / 0) (#15)
    by gyrfalcon on Wed Mar 18, 2009 at 02:09:00 PM EST
    you would have heard your question asked (several times) and answered (several times).

    what question (none / 0) (#20)
    by Inspector Gadget on Wed Mar 18, 2009 at 02:34:21 PM EST
    are you referring to? Not sure why you are being so demeaning since all I said was I want to know why these people can't tell the truth. Wasn't submitting it as a question, gyr, and I'd be surprised if they were asked or if they answered why they lie.

    I'm not being demeaning (none / 0) (#25)
    by gyrfalcon on Wed Mar 18, 2009 at 03:29:57 PM EST
    I'm giving you the good news that the question you said you felt was so important about how come some people who got retention bonuses have left already was asked and answered several times during the hearing.

    If you choose to automatically classify everything said by Liddy, Geithner, Obama and whoever all else as a lie, that's your right, of course.


    That is not the question I said was (none / 0) (#27)
    by Inspector Gadget on Wed Mar 18, 2009 at 04:02:42 PM EST
    important. Read again. I also did not say that everything they say is a lie.

    Write your own comments rather than rewrite mine. I know better than you what is in my mind.


    Here's the real zinger question (5.00 / 3) (#12)
    by Cream City on Wed Mar 18, 2009 at 01:43:04 PM EST
    from Rep. Judy Biggett of Illinois -- never heard of her but like her mind.  She asks the AIG CEO:

    If the taxpayers had not put money into AIG, would AIG have been able to pay the bonuses?

    Liddy's answer:  Uh, probably not. . . .

    Of course, he goes on to provide all that context crap.  But there 'tis.

    And now she asks just who are the trustees?  There 'tis again.  Btw, expert from IMF I heard on NPR says it is amazing that all of the trustees of all of these bad banks have not bailed, i.e., resigned in disgrace.

    They have no shame.

    Yeah, I hate context (none / 0) (#16)
    by gyrfalcon on Wed Mar 18, 2009 at 02:09:49 PM EST
    Ha. I'm all for context (5.00 / 1) (#19)
    by Cream City on Wed Mar 18, 2009 at 02:34:00 PM EST
    when it illuminates.  His did not.

    That said, Liddy is working for us for free -- and it looked to me like his staff did not have him ready.  They probably were too busy moving their AIG bonuses to offshore accounts.


    Not sure what (none / 0) (#26)
    by gyrfalcon on Wed Mar 18, 2009 at 03:35:54 PM EST
    additional illumination on that answer you want beyond what he said, "Probably not."

    THe trustees in the congresswoman's question, btw, are trustees appointed by the NY Federal Reserve post bail-out/takeover/whatever.  From what I can tell, these trustees are at least so far functioning as not much more than tokens.  They were only recently appointed and haven't had much of a presence, apparently.

    Federal Reserve people, however, are apparently all over the place and are directly participating in management decisions for AIG.

    Unless, of course, Liddy is a creature from hell and is lying through his teeth and is busy squirreling bonus money and anything else he can skim from AIG into offshore accounts so he can retire once again and live in even more luxury than he already was before he agreed to the government appointment to try to get AIG straightened out for $1 a year.


    Mmmm, (5.00 / 1) (#17)
    by NJDem on Wed Mar 18, 2009 at 02:16:22 PM EST
    pretty bad choice of words here:

    White House chief of staff  Rahm Emanuel offers  an intriguing glimpse into  President Obama's thoughts about the AIG furor:

    As angry as the president is at the news about A.I.G., which he learned Thursday, Mr. Emanuel said, "his main priority is getting the financial system stabilized, and he believes this is a big distraction in that effort."

    "Big distraction"?  You know the GOP is going to eat this up...

    The bonuses are a diversion--from the transfer of (5.00 / 1) (#18)
    by jawbone on Wed Mar 18, 2009 at 02:27:31 PM EST
    wealth from the taxpayers to the uberwealthy. Really.

    Check out Eliot Spitzer, who knows a thing or two about AIG. He has some questions for Geithner and Bernanke.

    Links for Spitzer and others at this Corrente post and comments.

    But it might just be a distraction the Obama WH welcomes. Gives Obama the opportunity to play populist and defender of the non-uberwealthy, all the while his administration still shovels money to the Big Bankster Boiz.


    Thanks for that link (none / 0) (#29)
    by BackFromOhio on Wed Mar 18, 2009 at 09:49:50 PM EST
    Both quotes from Spitzer interview and several of the comments are well worth reading.

    I do think it is being played up (none / 0) (#21)
    by Cream City on Wed Mar 18, 2009 at 02:35:05 PM EST
    a lot to distract us from something else afoot.

    Still, Rahm could have used a teleprompter, as that was bad improv that will feed the frenzy.


    Exactly. (none / 0) (#22)
    by NJDem on Wed Mar 18, 2009 at 02:45:23 PM EST
    I get what Rahm was trying to say and I understand his point--but it was a politically stupid thing to say.  

    "The people" are p*ssed, with good reason--and they/nobody likes to be told their beef is not legitimate.  It's not nothing or simply a "distraction" to them...  


    News to the contrary (none / 0) (#23)
    by Inspector Gadget on Wed Mar 18, 2009 at 02:49:01 PM EST
    As angry as the president is at the news about A.I.G., which he learned Thursday, Mr. Emanuel said

    Has been posted today.


    Two more fine NYT pieces (none / 0) (#28)
    by RonK Seattle on Wed Mar 18, 2009 at 05:10:29 PM EST
    Paying Workers More to Fix Their Own Mess, in which David Leonhardt punctures some retention pay thought-balloons.

    A.I.G.'s Bonus Blackmail, a guest opinion piece by GWU law prof Lawrence A. Cunningham, taking inventory of the several doctrines under which the sanctified AIG bonus contracts might lose their haloes.

    Thanks to you, too (none / 0) (#30)
    by BackFromOhio on Wed Mar 18, 2009 at 10:02:56 PM EST
    for links to these informative pieces.