AIG Bonuses Raise More Questions About Geithner and Summers

by: Chris Bowers

Mon Mar 16, 2009 at 22:40


Due to the overwhelming public backlash at the AIG executive bonuses, the federal government will write new rules into the contract for the $30 billion they are about to give AIG:

[T]he administration would use a $30 billion installment of bailout funds approved March 2, to bring some pressure to bear. The official said before AIG can draw down funds from the $30 billion, new rules would be written into AIG's contract. The idea: to ensure no government money goes toward paying financial products division bonuses and that the cost of bonuses already paid would be recouped for the taxpayer.

However, the official said, Treasury has determined there is no way the government can actually extract the money from the individuals who received the bonuses.

This isn't nothing, but it still raises several questions, all of which come to point at Larry Summers and Timothy Geither:

  1. Why weren't these rules written into the AIG contract in the first place? Geithner is in charge of that department, both as Treasury Secretary now and as the backer of the original AIG bailout when he was head of the New York Federal Reserve. Given that he was in charge of both AIG bailouts, why isn't he taking a lot more of the blame for this? More than anyone else in the government, Geithner could have prevented these bonuses. He failed.

  2. Further, given that we were promised improvements in TARP under the Obama administration, why did it take a public outcry to actually improve these contracts? Larry Summers sent a letter that dissuaded Senator Chris Dodd from passing legislation to legally mandate improvements TARP.  Given the promises that were made, why aren't there guarantees against this sort of excess in all TARP contracts written by the Obama administration?  Larry Summers promised us there would be.  He failed.  Maybe its time for the "very severe hostility" Chris Dodd had threatened?

  3. Why isn't everyone at AIG involved in the scandal about to be fired?  We own 80% of the company, so we should be able to hire and fire people, right?  And even if we can't just hire and fire people, we can apparently still change the contract. As such, why can't we make firing people involved in the scandal conditions in the contract?  Everyone involved in this should be fired.  They took $170 billion in government money than used it to line the wallets of already wealthy employees.  Fire them now.

  4. Finally, there is a fairly obvious legislative solution that will allow us to get the money back: just pass a law requiring a 100% tax on bonuses paid to employees at companies that have received bailout funds. In fact, Representative Carolyn Maloney is about to introduce a version of said legislation.  In the current political environment, where only 14% of the country opposes giving back these bonuses, it probably has about a 99% chance of passing.  As such, why do Summers and Geithner keep saying there is no way to get the money back? Clearly, there is a way.  Are they lacking in imagination, or are they protecting the executives?
I am getting really sick of Geithner and Summers.  If they were serious about fixing TARP, then conditions against employee bonuses would already have been in the contracts they wrote (Geithner) and promised us they would write (Summers). If they were serious about punishing the people involved, they would include requirements to fire those people in the new contracts (which they are not talking about doing), and they would not have incorrectly stated that there was no way to get the money back (they would have at least said they were looking into it).

It is becoming hard to avoid the conclusion that Geithner and Summers are working to protect the Wall Street executives at the financial institutions that are receiving TARP money. Its either that, or they are demonstrating a lot of incompetence. No matter which is the case, I have created a petition asking President Obama to replace Geithner and Summers on his economic team. We need people who are serious about changing TARP to be running TARP. Geithner and Summers ain't it.
Chris Bowers :: AIG Bonuses Raise More Questions About Geithner and Summers

Tags: , , , , (All Tags)
Print Friendly View Send As Email
AIG Bonuses Raise More Questions About Geithner and Summers | 55 comments
Evidence? (0.00 / 0)
"Due to the overwhelming public backlash..."

Where is the evidence for this? The press keeps "saying" this is true, but how can it be? It all happened very quickly. There weren't any polls.

Massive support (4.00 / 6)
Here is a relevant poll:

The Harris Poll. Feb. 10-15, 2009. N=1,010 adults nationwide.

"Financial institutions in New York paid over 18 billion dollars in bonuses for 2008 when their shareholders lost large amounts of money. Knowing this, do you agree or disagree with the following statements? . . ."

"These bonuses should be returned and the money should instead be paid out to the shareholders"
Agree: 83%
Disagree: 14%

Changing the phrasing from "shareholders" to "taxpayers" would not hurt support for this statement at all. In all likelihood, it would improve support for this statement.

Best case scenario for AIG: 14% of the country supports what they did.

[ Parent ]
here's some (4.00 / 5)
http://www.washingtonpost.com/...

A tidal wave of public outrage over bonus payments swamped American International Group yesterday. Hired guards stood watch outside the suburban Connecticut offices of AIG Financial Products, the division whose exotic derivatives brought the insurance giant to the brink of collapse last year. Inside, death threats and angry letters flooded e-mail inboxes. Irate callers lit up the phone lines. Senior managers submitted their resignations. Some employees didn't show up at all.

I think it has to be true that the public backlash is responsible.  We know, as Bowers wrote above, that the government tolerated these bonuses. What is different today from last week or last month? Public awareness of the bonuses.

It is very sad for me to say it, but frankly0 is right on this one.



New Jersey politics at Blue Jersey.

[ Parent ]
Why not ask Obama to replace Obama? (4.00 / 2)
Remember his very first veto threat (even before his inauguration)? Obama threatened to veto measures that some Democrats in Congress were considering which would have tried to add more oversight, accountability and transparency to the usage of TARP funds.  Obama disagreed and went to Capitol Hill and threatened to veto such measures.  Now, with a public backlash and his budget meeting skepticism, he is trying to look "touch on Wall Street." It's a little too late for that.

[ Parent ]
Average person (4.00 / 3)
The average guy is only going to see Obama's excellent response. They don't watch Sunday talk shows. They don't watch C-SPAN. They don't read newspapers. They don't know who Geithner and Summers are.
What does that have to do with anything? (4.00 / 9)
So what? Does that somehow mean that Geithner and Summers are doing a good job, because the average person doesn't know who they are?

I think Obama would look great--and very serious about change--if he fired two top people in his own administration for letting this happen in the first place. Which at least Geithner absolutely did.

[ Parent ]
And why did Obama hire Geithner in the first place? .. (3.33 / 6)
why save him over Daschle?  to appease Wall Street?  Is Obama admitting he is bought off by Wall Street by keeping Geithner?  Timmy seems to think he is still working at the Fed .. and not for the American taxpayer
[ Parent ]
they were able to keep geithner becoz the republicans did not object (4.00 / 4)
Y did the reps not object and pass on banging the upcoming dem administration for the absurdity of having a guy in charge of the treasury, and as a result the irs, that cheated on his taxes?  Becoz wall street wanted geithner!!! he understands the situation wall street said ... he'll make a fine secretary of treasury and we need his expertise in these troubling times for our banking system.  

and both parties take orders, and money orders, from wall street ... so geithner stayed.

Z  

[ Parent ]
he believes in technocrats (4.00 / 4)
That's why, in my opinion.

New Jersey politics at Blue Jersey.
[ Parent ]
It think it is meant to be an addendum to the facts. (4.00 / 2)
They even believe that Obama is a liberal.  People don't have a clue.   They know bailout, bonuses, and pissed.  Who, where, when, and why is whole another story.  

Cenk Yugar did a pretty accurate diary about the show of "fake outrage" our politicians are putting on.  He points out that they knew, just didn't care, and have to play "who could have guessed".  


They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  

[ Parent ]
Why so negative? (4.00 / 7)
The average person who will become aware of this petition knows full well who Geithner and Summers are.

Do you think Geithner and Summers are doing a good job? If so, make the argument for keeping them.

If not, what action do you think would be better than pushing for their resignations?

[ Parent ]
And this is still (0.00 / 0)
going to be a small number of the American population
[ Parent ]
You're right, why bother. (4.00 / 1)
Wouldn't you be happier watching TV?

Montani semper liberi
[ Parent ]
If only the czar knew! (4.00 / 2)
Seriously, I think we should wait 'til Obama does something. He's only been in office 60 days. Anyhow, there are the midterms to think about.  

I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD.  
Now that's a left handed compliment if I ever saw one. (4.00 / 1)
Just wait for him to do something.   I'm waiting, and waiting, and waiting.  

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  
[ Parent ]
A simple solution (4.00 / 2)
Congress passes a bill that taxes all bonuses paid by any company that receives/received TARP money.  The tax rate is a flat tax to keep Steve Forbes happy --  100%.  Done.
The bonuses are a rounding error (4.00 / 6)
The real issue is the bailouts. (I grant that the bonuses incentivize, but to me the real, indeed the only, issue is that from 2008 onward, the Fed and Treasury threw over two trillion dollars into an enormous hole, with no transparency and no accountability.

Focusing on the bonuses is pure kabuki.

I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD.  

[ Parent ]
I agree, but (0.00 / 0)
my "solution" was in response to this:

The idea: to ensure no government money goes toward paying financial products division bonuses and that the cost of bonuses already paid would be recouped for the taxpayer.

[ Parent ]
Yeah, but kabuki has its uses (4.00 / 5)
The Republicans are masters of using kabuki about trivial sexual indiscretions for substantive political purposes. It's bizarre that a few hundred million in bonuses are producing an outrage that hundreds of billions in secret giveaways to those responsible for the economic crisis didn't. But, if we can use it to produce good public policy, we should.
[ Parent ]
Well sure (0.00 / 0)
and one way to do that is to call the kabuki for what it is.  

I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD.  
[ Parent ]
Er, I forgot to say (4.00 / 7)
Terrific post. Really pulled a lot of the threads together.

And see Yves on the AIG compensation timeline here, with quotes from Charles Black of Charles Keating fame.

The smart econoblogs and the un-kidnapped in the left blogosphere really need to get together a lot more often. Yves is just terrific. I mean, why read the latest Sarah Palin takedown (which doesn't happen here, thank the FSM) when you can read great analysis of the most pressing issues of our day? My $0.02.

I am in earnest -- I will not equivocate -- I will not excuse -- I will not retreat a single inch -- AND I WILL BE HEARD.  

It's taken all day (4.00 / 5)
Finally a post suggesting an appropriate course of action. Firedoglake had a useless petition that I read about. Moveon.org's was somewhat better. I think removing Geithner and Summers is the best course of action. Whether this administration has enough sense to replace Geithner with someone qualified for the position is questionable, but it would be worth it to see whether Obama's ego can take it like a person. Remove Geithner and Summers. Good idea. I sent this one along to friends I believe are sensible enough to sign it.
Regarding #3 (0.00 / 0)
The way that corporations work is that the shareholders elect members of the board, who appoint the senior officers, the senior officers then hire junior officers, etc. etc.  So, generally speaking, shareholders cannot simply hire and fire employees (some companies may allow for shareholder input on very senior officers, but this would be spelled out in the company's foundational documents, such as the articles of incorporation or bylaws).  The government may not even have any presence on the board at the moment, if no board member's term is up.

As for the second sub-point, I'm not sure what management could have done if in fact there was not any incentive from the government to deny the payments.  It sounds as if the company was contractually obligated to make the payments; therefore, they'd probably face lawsuits if they did not follow through.  And, unless and until the government makes it painful for them to comply with those contractual obligations, there is no business justification for violating the contracts and therefore either avoiding or mitigating their liability for any breaches.  You would have a situation in which the employees at issue may well still get their money but the company would also incur significant litigation costs.  At least now, by putting strings on future funding, management has a rational basis for denying the payments where none existed before.

uhm (4.00 / 4)

there is no business justification for violating the contracts

I don't know about anyone else, but my bonus is explicitly tied to overall company performance.   If the company is in the tank, it's understood I don't get a bonus.  

"we need that money to pay our massive obligations" is a pretty fine business justification.  

[ Parent ]
That strikes at a more fundamental issue (4.00 / 1)
Does anyone know exactly what these "bonuses" are for?  I mean, I realize that term has been thrown around by everyone, but I've also read that they are simply contractual payments to which the employees are entitled if they stay with the company for a certain amount of time.  My own company has drastically cut back on performance-based bonuses this past year, and I don't think that a rational company would willingly pay out funds that it doesn't have to, so my guess (and it's only a guess) is that there is no out clause.
[ Parent ]
According to yesterday's NPR (4.00 / 1)
(sorry no link) the bonuses are called "retention" bonuses designed to keep "talent" at the firm. They're "fairly common" on Wall St. since the run-up of the market led to competition to keep people who understood complex derivatives tied to the firm.
[ Parent ]
That's because what you get is a bonus (4.00 / 4)
that's not what this is...this is like retention compensation. You get this for working in company for a certain length of time. It's stupid, but it happens. My dad's company does the same thing and every year in November, they get their "bonus" even if the company isn't profitable.

This past year, his company tried to cut the bonuses and his co-workers fought it and won.

Bonus is the wrong word to us for what this is.  

[ Parent ]
Waggoner and the UAW had contracts.... (4.00 / 1)
They forced them into pay and benefits cuts, and they lost all bonuses.   When will people stop tolerating the double standards and making excuses for an administration that is a clone of Bill Clinton.

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  
[ Parent ]
I'm pissed too watching wolves in our hen house let in by obama (4.00 / 7)
this was completely predictable but somehow mr. change couldn't see what these two were going to do:  what they've been doing their whole life which is represent wall street interests.

Basically they are full of shit.  Also, note that larry summers and geithner were hectoring Dodd to pull back on his executive compensation restrictions that he wrote into the bailout bill.  On 2-14-09 when this was first announced the restrictions were supposed to be retroactive according to the wsj (google bankers face strict new pay cap.  Later, they mysteriously changed to not being retroactive in articles the very next day (http://news.aol.com/article/congress-strengthens-executive-pay/343331?icid=sphere_newsaol_inpage).  Whether that was due to a mistake in the first article or the result of the strenuous efforts of "public" servants geithner and geithner's cheney, summers, I do not know.  but it is obvious that obama's wall street proxies that HE appointed such as summers and geithner and orszag as well and throw in emanuel and then also furman and then robber rubin's son and on and on and on (you sure do want to keep those wall street contacts properly fed and that funnel lubed for your reelection campaign, don't you obama?) did not want restrictions on these wall street guys' pay that they've been rubbing elbows with for a long, long time.  

so that makes larry summers' little act yesterday on tv in which he huffed and puffed up like the toad that he is rather disingenuous.  you know the one where he says that he is steaming mad at aig and can understand the rage of the public.  then he goes on and says that it's due to not enough of the types of government regulation that he labored so hard in the clinton demonstration to break down.  then next up he says that there is nothing that can be done unfortunately becoz it's in the contracts which he fought so hard to make sure stayed just the way they are.  Then of course he caps off his mind-splitting hypocratic crescendo with comments that we are a nation of laws and we have to abide by the rule of laws.  hahahhahah ... what a theatre of the absurd with the starring role going to a corrupt wall street toad representing mr. hope/mr. retroactive immunity for the telcoms/mr. "let's just move along and forget about past war crimes" lecturing us about the sanctity of the rule of law when it's obvious that to the one that was a top in his class graduate of harvard law school that the rule of law is one that is only to be applied AGAINST the citizens and FOR his big campaign contributors and plutocrat pals exemplified by the dichotomy of the aig and uaw situations.

think about this:  who appointed these people to his economic team that have represented wall street interests their entire life?  that is the one that is ultimately responsible for this aig bonus bs and don't let his clever oratoricals where he tries to act like HE is outraged at what THEY (aig/wall street) did fool you, becoz HE is THEY.

now the next little work around/act of deceit they will pull on us is to add the bonus money to the bill that aig will never pay back.

Z  

yep, here's the next deceit ... (0.00 / 0)
"By seeking to link repayment of the bonus money to the coming $30 billion in assistance, the administration seemed to leave open the possibility that the company would effectively be repaying taxpayers with taxpayer money. A Treasury official disputed that taxpayers would be repaying themselves, but could not specify how else the company would give back the money."
http://www.nytimes.com/2009/03...

here's what I wrote earlier:

"now the next little work around/act of deceit they will pull on us is to add the bonus money to the bill that aig will never pay back."

this is just another variation of the same trick. they get to keep the bonuses and the company will owe more money that they'll never pay back anyway unless you care to delude yourself into believing that aig will pay back 170B fucking dollars ... and counting. real clever ...

Z

[ Parent ]
Unconstitutional (0.00 / 0)
Finally, there is a fairly obvious legislative solution that will allow us to get the money back: just pass a law requiring a 100% tax on bonuses paid to employees at companies that have received bailout funds. In fact, Representative Carolyn Maloney is about to introduce a version of said legislation.  In the current political environment, where only 14% of the country opposes giving back these bonuses, it probably has about a 99% chance of passing.  As such, why do Summers and Geithner keep saying there is no way to get the money back? Clearly, there is a way.  Are they lacking in imagination, or are they protecting the executives?

There is no way in hell this is constitutional, but I suspect Maloney knows that and even if it does pass, and I highly doubt it will since this whole thing will likely be old news by Friday, by the time the courts overturn this, we would have all forgotten about this  

why do you say that? (4.00 / 2)
Tax rates for the current year are changed all the time.

New Jersey politics at Blue Jersey.
[ Parent ]
But the money was contracted in 2008 (4.00 / 1)
This income was not decided on in 2009, it was decided on in 2008. It's already earned income. We can tax bonuses given from here on out at 100% legally and I'd support that, but this crosses constitutional barriers. It also reeks of bill of attainder. What possible reason would Congress have to do this if not to punish AIG. It hard for me to see a court allowing this. It may be a good way to cool the masses for a while, make them feel they're being heard, but that's it.

The government has a habit of passing populist laws they know are unconstitutional just to show they're listening.  

[ Parent ]
They certainly didn't claim it on their 2008 returns (4.00 / 2)
So  the tax rate can be changed without problems. There's not even a hint of bill of attainder problems if it's made a general requirement of bailouts.
[ Parent ]
Easy way around that (0.00 / 0)
technically these aren't "bonuses" these are part of the salary. AIG doesn't call them bonuses, so on their income taxes, the execs won't claim as such. Congress would have to stipulate what they mean by "bonuses" and there's where it gets risky and there's a risk of bill of attainder, because we're taxing something that was agreed up a year ago.

[ Parent ]
my solution (4.00 / 3)
Let them keep the bonuses, but put them all on trial for fraud based on their past work issuing insurance that they knew they couldn't honor. See how they like that.

Also, take AIG into receivership and put a new temporary CEO in charge, hired by the govt. This Liddy guy who is running the show now sounds like a tool.

[ Parent ]
I don't think we can put them on trial (0.00 / 0)
It's a stretch to think any judge would allow prosecutors to arrest and indict someone for fraud  
[ Parent ]
Obama needs to fire Geithner (4.00 / 8)
Another month of this and Obama's going to be turned into Jimmy Carter only with less of a reputation for moral rectitude.  If he lets the bankers push him around he looks weak, and if he keeps letting Geithner give away the store we'll have nothing left.

There's a way of getting money back for the treasury: taxes.

Carter had principles. obama does not (2.00 / 6)
and that became clearer recently when he proudly proclaimed himself a new democrat ... translation:  corporate sellout ... if dems were too blind to see it earlier.  

but it was clear when he sold out on the retroactive immunity fisa bill that he had previously had been against.  it was clear when he lurched to the right as fast he could after winning the nomination stopping to do some shoe shining for aipac along the way telling them how much he loves/obeys Israel.  it was clear when he backed blue dog john barrow in a district in ga over a progressive black woman in a dem primary where 60% of the registered dem voters were black.  it was clear when he appointed one of the most cynical bastards in dc as his chief of staff.  and then later joe biden, hillary clinton, geithner, summers, orszag, robber rubin's son, etc., etc., etc.  it was clear when he had his justice dept. put together the same lame executive privilege arguments to protect the bush administration that bush's doj did.  it was clear when he used his too clever cynical semantical bs that put an end to the term "enemy combatants" but kept the same policies of dealing with the now newly non-enemy combatants as when they were enemy combatants.  it was clear when he said that he is against signing statements but then used them days later.

And it's most clear when he won't go after a bunch of war criminals that have murdered hundreds of thousands of innocent people and tells us that we need to move on and not get caught in the past.

obama stands for little but his own power.  he just thinks that he is so smart that he can pull little dumbass pr stunts like HE did today and fool us in acting outraged and indignant at what aig did to us when HE first of all ain't us and second of all could have stopped them from doing it to us while having his staff clap wildly in the background.

he ain't Carter ... that is for sure ... but he's turning out to be very, very much like clinton.

Z

[ Parent ]
and Carter was willing 2 B a 1 term president 2 do what was right ... (1.33 / 3)
... for his country, while this dude is already concerned about funding his reelection campaign.

Z  

[ Parent ]
Agree, Obama will be blamed for this (4.00 / 4)
The large majority of the American public is aware of the AIG bonuses and it is Obama who gave the final approval on another blank TARP check. He will be blamed for this if he doesn't take some decisive action on it, fast.

Simply stating it's not ok, isn't enough.

Great post, Chris!  

[ Parent ]
yeah we had enough pr stunts with the last adminsitration ... (0.00 / 0)
... we can't stomach anymore of this staged outrage nonsense with your staff clapping in the background like a bunch of trained seals when you were the one that was ultimately responsible for allowing these tax-payer funded bonuses to be transferred to these crooks.

and still no word as to when mr. hope knew about these bonuses.  still waiting for that ... I guess they are still working on a clever arrangement of words to address that important fact.  

Z  

[ Parent ]
And liberals will be blamed for this because lord knows (4.00 / 4)
Obama's a socialist and a liberal.  See what happens when you put liberals in charge?  They spend all of your money on CEO bailouts and bonuses.   I can hear it now.  

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  
[ Parent ]
still waiting 4 santelli 2 weigh in on this ..................................................... (0.00 / 0)
Z
A question. (4.00 / 1)
The media harped endlessly about wasteful "earmarks" in the omnibus bill, to the exclusion of all other elements.  

Many here, and on other liberal sites, noted quite sensibly that this was pure distraction, as earmarks were 1-2% of the bill.

Now, there is a great outcry about wasteful bonuses in the amount of $165 million paid out of the $175 billion AIG bailout.

How are the bonuses any less a distraction than the earmarks?

The difference is pretty clear (4.00 / 3)
Most of those earmarks are for good projects. Science research, constructions, etc.

But these bonuses are rewarding the very people who helped destroy our economy. Imagine if the earmarks were all about giving money to Bernie Madoff and Dick Cheney. Then maybe you'd understand the level of outrage over these bonuses.

[ Parent ]
A different issue (4.00 / 1)
The question in this thread is whether Summers and Giethner should be fired on the basis of preventing the misspending less than one percent of the amount given to AIG.  

The only rational response is that of course they shouldn't - they should be judged on the other 99% of the funds.  That sane analysis would apply whether the funds were given to Madoff or Cheney.  In fact, many of these bonuses are small, and most of us don't know the moral standing of all the employees who received them.

I am sympathetic to the view that these bonuses are symbolic of a larger issue of failing to exercise oversight.  With more oversight and control of the funds, for example, it is possible that TARP would have spurred lending, rather than hoarding, among the banks.  Other than the misspending of this small percentage of the funds, what is the larger question of oversight with the AIG funds?

In the context of this thread, it's just an excuse to call for axing Summers and Geithner.  The view among many here seems to be that the babe-in-the-woods Obama has been corrupted by these Chicago-school influenced advisors.  Obama won't fire them, and if he did, there's every indication that he'd replace them by insiders of similar backgrounds and views.

[ Parent ]
I'm with you (4.00 / 1)
But there are a few problems with the proposed solutions. I've heard that if we fire all these folks at AIG, then those credit swaps will go into default and we'll be on the hook for hundreds of billions immediately. I'm not smart enough to know whether this is true, but it's been discussed by openwheel and TPM today. If it is true, it's outrageous. Imagine a baseball player with a contract that says, if you cut me from the team you owe the city $10 billion dollars. Who writes up these kinds of contracts?

Regarding the 100% tax, it's unclear if Congress can pass a retroactive tax, and it's also unclear if Congress could tax British citizens, which many of these AIG folks are (this division is based in London). I think it would be smarter to pass a bill voiding all bonus contracts at TARP and Fed recipients, and to make it illegal to give out bonuses that aren't based on commissions.

We might not even be able to do THAT (4.00 / 3)
but I haven't looked into it...the best situation would've been to trash TARP on January 21st and have Congress pass a new bailout and allow the administration to put new stipulations on the bailout money, but that probably wasn't politically possible.

As far as who writes up these contracts? Unregulated banks, that's who.

[ Parent ]
Oh please, like Congress and Obama are doing such a (0.00 / 0)
great job and actually want to change anything.  They were all there and voted for all of this crap.  The wars, FISA, deregulation, free trade after free trade deal, the bankruptcy bill, avoiding single payer, the eteral pit called the drug war...   Yeah, like Congress can/will fix anything.  

The problem is that our political system doesn't work.  We have frick and frack, and they are both owned by the same guys.  

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  

[ Parent ]
The Puzzling Thing to Me (4.00 / 3)
is that AIG's intent to award these "retention" bonuses has been publicly known for several months now, but was mostly ignored until this week.

I think the Maloney tax surcharge made retroactive is the way to go because it takes care of all institutions, not just AIG.

The real issue here (4.00 / 3)
Is whether Obama is willing to fight Wall Street and its 30-year culture of unaccountable and reckless behavior.

When he intervened last October to ensure the passage of the first TARP bill he signaled that the answer was "no" and by doing so he has implicitly lashed himself to the Wall Street mast, instead of demanding a more progressive solution. His picks of Geithner and Summers made sense given his broader policy of giving Wall Street what it wants with few if any questions asked and with hardly any obligations at all.

This goes to the heart of his apparently nonexistent strategy to rebuild the economy - he can prop up a dead system, or he can start to construct a new one, but he cannot do both. So far he has clearly chosen to prop up a dead system. There's no FDR here.

Obama would do well to fire both Geithner and Summers - I cannot imagine there is ANY confidence left in Geithner at all now from any quarter outside the White House, and Summers is losing ground too.

But it won't happen unless Obama is willing to actually shift away from his clear policy of propping up Wall Street. The April 2 meeting of the G20 in London could provide an opportunity to do this, especially considering the interlocked nature of the AIG and financial markets mess.

My guess, unfortunately, is that Obama stubbornly sticks to his guns, and will wind up causing significant political damage to his presidency in the process.

Jared Bernstein for Treasury Secretary (4.00 / 1)
Let's make it easy for Big O: Jared Bernstein for treasury. Hell, why not Stiglitz? Or Krugman? Send a message to progressives (i.e. show us that you're on our side), and send a message to Wall St. You really think they'd pull that crap on Joey S.?

And why not? Why not go with a progressive? If Obama's already starting to alienate the netroots (his "activist base") 50 days into his term, what chance does he have in 2012?

Hey Axelrod: We got your dude elected. If the Netroots had not fawned all over Obama in 2004, his candidacy would have never had a shot. In one fell-swoop, you can 1. throw us a bone here, ensuring massive enthusiasm and turnout in 2012 and 2. fix the crisis.

But in the midst of all this, you want us to gear up in a week or two...to push through Obama's budget?

I canvassed like hell for Obama. I'm not "starting" to regret it, I "regret" it.

Get with the program, O, or I for one will be backing a third party in 2012.

Good for Robert Reich (0.00 / 0)

Robert Reich made the most cogent statement about AIG specifically and the bailout of financial institutions generally.  These entities, now kept alive by taxpayer money, are neither responsive to markets nor accountable to the government.  The solution is nationalization.  In my opinion, this would be hugely popular, especially if it entailed new management teams for entities like AIG.  The public is at the boiling point with this issue, and the administration had better get in front of it.
One addendum: (0.00 / 0)
I don't know about AIG specifically, and since I never applied for a finance job I don't know a huge amount about the industry in general.

But I know people who did take that route, and they tended to view the bonus as an inevitable bit of the salary which just wasn't written on the form.

So as a goodwill gesture, I'd only implement the 100% bonus tax on bonus money above £1000. That way those who fucked up still lose out, but it's made clear that our problem is with those at the top, not those just starting out who are as ignorant as we are.

Well, we do have a problem with them being ignorant about what their company does, but we do at least believe that they aren't beyond redemption yet.

Forgotten Countries - a foreign policy-focused blog

AIG Bonuses Raise More Questions About Geithner and Summers | 55 comments
Donate to Open Left







QUICK HITS

Friends of the Earth thanks the OpenLeft community for the ideas you generate and your contributions to the progressive movement.
As an anti-spam measure, there is a 24-hour waiting period after registering before new users can comment.
blog advertising is good for you
blog advertising is good for you
LIBERAL INSTITUTIONS
STATE BLOGS
SEARCH

   

Advanced Search

Home | RSS/XML Feed | Register | Contact

  © OpenLeft 2007-2009, Powered by SoapBlox