What a clusterfuck. So many dysfunctional elements.

1) AIG itself. What the hell were they thinking?


2) Congress putting language in the stimulus bill that specifically protects contracts signed before Feb 11th, after a bill from two lawmakers tried to strip it out. Many think it is Dodd, who, unsurprisingly, was the biggest beneficiary of AIG campaign donations, but he's not admitting to it. It will come out, and I hope someone resigns over it. There's no reason for that clause to have been put in. None. Especially after Obama made such a big dog and pony show about limiting executives pay.

http://www.huffingtonpost.com/arianna-h ... 76456.html


3) When did Geithner know? He obviously knew before it became a big breaking news story and, minimally, did no damage control before the fact. Summers went on TV as late as Sunday and said nothing could be done before they did an about-face and promised to get the money back. Now, a new report from Time Magazine that the Fed notified Geithner 10 days before Geithner admitted to knowing about it. 3 scenarios: Did Geithner lie; is he so understaffed that it didn't float up to his desk; are his staffers completely incompetent? None of those are good answers regarding the Treasury department in a severe recession.

Treasury Learned of AIG Bonuses Earlier Than Claimed
http://www.time.com/time/business/artic ... 38,00.html

Geithner will be out within a month. And if they haven't appointed anyone else to any of the 17 other Treasury positions that are open right now, that will leave absolutely ZERO personnel in leadership positions at Treasury.


4) The political capital expended by Congress and the Obama Admin has completely depleted their ability to pass TARP II, which most seem to think is necessary (and I do not). Regardless, there's no way in hell Obama can drum up public support for that now. Another 750 billion for banks? Fuck off.


5) The more important but less covered fact that AIG sent a huge percentage of their bailout money to overseas banks and other banks like Goldman Sachs.



http://www.politico.com/news/stories/0309/20039.html

I am not going to hold my breath waiting for coverage on that one. But sadly this is the most important item on the list.

I also want to know who AIG gave campaign funds to.

That AIG has been sending bailout money to overseas banks has been covered by just about everyone I can think of(including the major news networks, even Fox), it's not super-sekret infoz, sorry.

Aren't those payments going out because of debts owed? If so, is it your contention that companies should not have have to pay debts to foreigners if a company is in financial trouble?

And Venen is right; this HAS been covered. I'm not sure what more you want.

WHOA WHOA WHOA

something improper is going on with AIG?!

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Financial groups were having trouble getting foreign investors to buy their paper, so they attached derivative guarantees to them. Then the market tanked and they are having to buy them back at many times their current face value. This is true of most of the bailout recipients, not just AIG.

A house of cards was built, using 'fake' money as collateral for more investment based on the increasing value of the 'fake' money due to the increased investment (yay!). Then the 'fake' money vanished and now the investors are calling in their loans as they have matured. And this is just the first wave of it. At least that's my understanding of it.

Given that AIG has buttfucked just about everyone, all over... shouldn't we demand that the money be used to pay off American bank debt first?

Oversight in hindsight is kind of a bad policy, if you ask me.

It is being used to pay off American bank debt; that debt is held by overseas investors.

No. When money is due, money is due. Setting the precident of, "if we aren't making money we can go ahead and screw over foreigners first" sounds like a great way to completely demotivate foreign companies from investing in the US.

And oversight in hindsight seems to me to be exactly what you are proposing with this, "omg pay Americans first!" attitude.

*nod* The counterparty structure for asset backed securities and credit default swaps gets crazy. You'll have a given pool of debt in the hundreds of millions of dollars that will be securitized by a combination of, say, Deutsche Bank, Morgan, Merrill, and Royal Bank of Scotland. Each of them has an equivalent claim (proportionate to their share of risk assumed).

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Hope is the new black.

What I want is an investigation and some oversight. How can you give 180 billion dollars to a company to distribute as it sees fit, when that company is one of the major reasons we're in the crisis we're in..? We hate AIG so much that we want to fire all of the executives, yet we're entrusting those executives to distribute taxpayer dollars with no oversight? Really?

AIG did not even release the information until they started to get huge pressure to do so. We didn't even know how that money, which we gave them a first installment on LAST YEAR, was being used. We keep giving them incrementally more money, and we have no idea where it's going. That's a criticism of the bush administration, not Obama, so you can relax.

Do you think if Paulson or Geithner had to say that a large part of the bailout for AIG would go to foreign banks - it would have been so easy to pass?

Outside of foreign banks getting taxpayer dollars, they also distributed more than 10 billion dollars to Goldman Sachs, which had already received a bailout.

I agree with you on most points there. I just don't understand your problem with things like this:




Do you understand the concept of debt and how someone has to pay it back? They owed Goldman the money, so they paid it back. The bailout helps them keep their debt servicing agreements and keeps them afloat. What is the problem with this?

Please understand that I have always been pretty upset about the whole idea of the bailouts in the first place. But I don't understand what you think the money is for, if they aren't supposed to pay their debts.

I think the key issue is that they are using american taxpayer money here, Fribur. They should be paying off their domestic debt first in my mind also.

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World of Warcraft: Kallaystra, Gweila, Steakumn, Tarathia [ Feathermoon/Horde ]

I don't think contractual debt should be based on the nationality of the company you owe.

That doesn't explain his objection with Goldman Sachs, anyway.

Are you SURE it's debt they are paying off? I admit I am no financial expert, but I also suspect you are not, either, Fribur.

I did find this interesting article after trying for a while to dig up exactly what that money was used for.

http://www.reuters.com/article/politics ... B520090318

However, the thrust of my point, that more oversight is needed, is all the stronger after reading this.

And last, isn't this at least pertinent given Paulson's ties to Goldman before becoming Treasury Secretary?

I don't really understand. Call it what you like, but "debt" is simply an obligation to pay someone else money. Do you think AIG just said, "hrmm we have money now-- let's just give to a random company. Hey Goldman Sachs-- how about you? Want 10 billion?"

Foreign investors won't be attracted by having a zero domestic debt balance and rolling over foreign debt. We need them to buy our bonds.

That's a very closed mind you have.

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Kuwen Furyblades
Hunter of Memento Reejeryn
Champion of Faydark

My tax money is already going towards paying down our own international debt (in theory) -- why should it go to paying a private company's international debt, also?

This is one of the reasons I was against the bailout in the first place.

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World of Warcraft: Kallaystra, Gweila, Steakumn, Tarathia [ Feathermoon/Horde ]

They're not necessarily separate things. Not all of the money that we individually borrow for mortgages, credit cards, etc is domestic. That debt is also traded as an investment.

add: And insured or guaranteed by the government.

I can't even start to consider how deep we'd be if we started to refuse to pay foreign creditors.

So the latest is Congress passing a 90% tax on bonuses.

How do you feel about that? I'm a little disturbed. Not the substance of it, I don't think it's ultimately inappropriate to hit bonuses at AIG, at this point. It's more the precedent of using a tax as essentially a form of revenge. If we're 80% owners of AIG, shouldn't we pursue the same recourse to such an action that any 80% owner of a business would do?

Some of the problems I see with it.

1. The provision in the stimulus bill that guaranteed those bonuses. However it got there, it's there. It's kind of like Congress playing the worst sort of corrupt deal-making to get it in there, then when the light is shone, instead of sucking it up as THEIR mistake, they resort to a potentially unconstitutional method of taxing that money.

2. It would seem to be unconstitutional. Is there precedent for something like this? AIG violated no law in giving out those bonuses, only public opinion.

3. the scope of the bill would limit bonuses for ALL bailed out companies. This, presumably, can include the auto industry, other sectors of banks, etc. (http://www.huffingtonpost.com/2009/03/2 ... 77348.html) is that appropriate? any employee, of any division, of bailed out companies. Now, I can see the outrage of certain divisions of companies like AIG, or Bank of America, or even GM/Ford. But not all divisions are full of greedy incompetent fucks. And if you have a company like GM or Ford that, in order to survive, HAS to innovate and change their business, can you really take the competitive hit? If I'm a genius researcher or business development professional at one of those units.. why would I stay, and not bail to another company or industry. If we know those companies HAVE to adapt to survive, why are we limiting their ability to keep and reward their best employees, in divisions that might have nothing to do with their problems. If I were a competitor, I would probably start looking at taking the brightest people at some of those companies.


On a side note, check this out. AIG is suing the US government for return of certain tax money.

A.I.G. Sues U.S. for Return of $306 Million in Tax Payments
http://www.nytimes.com/2009/03/20/busin ... .html?_r=1

I personally don't like all the focus on these bonuses. In the scope of the entire bailout, I don't really care about it.

That said:



How exactly is it unconstitutional? Congress does have the power to levee taxes, and they can do so as they wish. Individual taxes on windfalls like this have been done before-- I don't really think there is any constitutional issue here, allthough I could of course be wrong.

Some speculate that it is a Bill of Attainder, which is outlawed in the constitution. There's disagreement here, though.

http://en.wikipedia.org/wiki/Bill_of_attainder

where is the list of the distribution of the bonuses? How many of them are retention or separation bonuses?

Usually when people are laid off then are given a "bonus" to stick around to finish the transition of their job to other workers. How many of those are in the count?

They were thinking they OWN US and they were right.

Dear AIG, I Quit!
http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=1&scp=1&sq=Dear%20AIG%20I%20quit&st=cse

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I agreed to work for $1 because I knew that I was getting a $700k bonus from money the company has only due to an aversion to bankruptcy proceedings and Congress wants to take it away so I have to donate it to charity and settle for the tax break Q_Q .