Josh Marshall lays it all out beautifully.
AIG’s Liddy, as spokesman for the entire financial industry, has told Mr. Obama (and by extension, all the rest of us), “Shut up, bitch(es), and give us our money. And don’t be slow or we’ll fuck you up the ass like nobody’s business.”
On Mr. Obama’s staff, messers Geitner, Summers, Axelrod et al have responded by saying, “They’re right, Mr. Obama, they are going to fuck you up the ass. Although you are president of the United States of America, you are powerless to stop them. All you can do is give them more and more and more money. But we can advise you on the best way to self-administer K-Y jelly.”
Josh Marshall’s exposition is not so crude as my own summary of it, and I encourage you to go read it.
This will probably be the big test in Obama’s presidency, in the sense that if he fails it, he’ll have so far alienated his core constituency that any subsequent policy initiatives may be moot. People just won’t care or trust him. And so far, from me, at least, he’s getting a great big fat “F”.
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Interesting read. However Marshall leaves out a few facts —
* Liddy CEO, is getting paid a $1 year to clean up the mess at AIG. He was brought in AFTER the thing had cratered. Yet he sat there yesterday and took a beating that was neither deserved or warranted. Had it been me I would have tendered my resignation then turned to the television camera and starting reading the names and $ amounts paid to everyone of those assholes on the banking committee.
* The folks that received those bonuses were NOT the same folks that created this AIG mess to begin with. The ‘originals’ having long since left the sinking ship. So it is like watching the crooks who created the mess leaving crap all over the floor; the cleaning crew comes in to straighten the place up, only to be caught by the ‘cops’ because they were given bonuses to stay around to help.
* Obama’s team knew as far back as November from a FINSOB meeting that the bonuses were on the table. What’s worse, Obama for all practical purposes is breaking the law. TARP requires there be a monthly oversight review of the funds dispersal over seen by Treasury, SEC, Fed. The last meeting conducted by FINSOB was in January. Five days before Inauguration. There has not been a meeting SINCE.
You want your guy to stop taking it in the ass? Well man up and suggest that maybe AIG should be railroaded directly to bankruptcy court. That is what should have happened to begin with. Would it be painful economically? Yes. But one cannot escape the pain. You either take it in one large whack to the head or you take it in a series of whacks all the way down to the inevitable conclusion anyway. But you don’t escape the economics.
The question you ought to be asking is why the bankruptcy route was not taken to begin with. You need go no further than the recipients list from AIG largess on the Banking Committee to find the answer. <a href=”http://www.investors.com/ed…“>In a nutshell</a>
John,
Another one of those cases where we agree more than we disagree.
The US Government owns 80% of AIG, and should own all of it. I don’t care if Liddy is making $.01/year. If he’s not willing to answer to his board of directors, in this case the committee before which he appeared yesterday and answer questions, then he should be fired.
I think bankruptcy was in order, and should be in order–or else reclassify AIG as a bank holding company and put it in receivership.
Further, as discussed here: http://www.nakedcapitalism…. ,
criminal investigations are in order.
As to the assertion that the bonuses are going to people who are poor innocent lambs left to clean up the mess created by others — how would we know that, since we don’t know who the people are? And if these people are mere functionaries who don’t know nothing, then why are they worth hundreds of millions of our dollars? Are you saying that ALL of these people were hired since last September? That’s preposterous.
It’s clear that the bonus contracts– which were written years ago — were designed to include a poison pill such that failure to pay them would constitute default & thus trigger a cascade of Bad Shit. Well, I’m sorry, that’s bad faith and that’s extortion. The division responsible for all the credit swap shennanigans, as far as I can tell, operated as a criminal enterprise, was improperly audited, and was known to be so by upper management. Under Sarbanes/Oxley, the (former) CEO & CFO are criminally liable. So were are the investigations?
I do fault Obama for choosing Geitner, Summers et al to “fix” this problem, and for allowing them to propose non-solutions that just constitute more and more wealth transfer from the vast majority of taxpayers to the hyperwealthy “experts” who created this mess. You noticed that I gave him an “F”, did you not?
Josh Marshall runs a moderately left/center political site. What are the headlines there? “Obama’s Team Tone-Deaf” “Geitner Clueless” “Summer a Failure” — those are not exact quotes, but close enough.
Obama was elected to clean house and restore the rule of law and equality among citizens. What he’s giving us, in this realm anyway, is warmed-over Paulsen. Either he thought we wouldn’t notice, or didn’t care, neither of which is acceptable.
Here’s what Paul Krugman has to say (you can find his column easily enough on NYT site):
“AIG
Preliminary thoughts on the tax bill:
1. It’s not the way you should make policy — it’s clumsy, and it will punish some innocent parties while letting the most guilty off scot-free
2. But — there wasn’t much alternative at this point. And for that I blame the Obama people.
I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.
This was bad analysis, bad policy, and terrible politics. This administration, elected on the promise of change, has already managed, in an astonishingly short time, to create the impression that it’s owned by the wheeler-dealers. And that leaves it with no ability to counter crude populism.”
I agree 100%
John,
* Actually we (govt) do know who bonus recipients are — list was tendered today.
* The contracts were issued in late 2007 for 2008 performance to be paid in 2009.
* I would never say any of them are innocent. Doing that kind of work takes street smarts far from innocence. That being said, Wall Street is notorious as a revolving door. I can’t say all those receiving bonuses weren’t there in 2006. But I would hazard that the type of folk that were there pushing bad paper for profit is not going to be the same beast of a individual that’s got a shovel in their hand cleaning it up.
* I would give Obama a pass on the AIG mess if he through Gibbs had not jumped on the faux pained Kabuki Theater express. Its one thing to have a Lt. screw up (Geithner), take the hit and make corrections. Quite another to feign outrage for something your own Cabinet knew back in November.
Plus it was bad political calculation. O should have seen that the Banking Committee is covered like a tarbaby on this one. He should have pulled the ‘above the fray’ bit, dressed Geither down some then kept his trap shut. Nothing any President could have said that would have improved the situation.
* If Obama is wanting rule of law then he should not sign any proposed tax provision as voted on yesterday. It most likely will not pass Constitutional muster. Recognize that and turn it back to Congress.
* I don’t think it is faith in the people per se as it is ‘who else is left qualified?’. Afraid to say it but it may very well be that the only people capable of fixing the bank vaults are the ones that broke in to begin with. (Even with the bad taste it leaves in my mouth to say it.)
* Oddly I won’t even rap Obama for bad calculations. You don’t blame a 2yo for breaking something. They know not of their wrong. But Obama is unqualified, inexperienced, and incapable. He needs to be removed. But instead we will just have to muddle thru till ’12.