It’s been 56 days that Obama has been in office and yet screw-ups of the Bush adminstration is still in effect, yet they are trying to put all the blame on Obama and his adminstration. Insurance giant AIG disclosed last saturday that they were paying $165 million in bonuses for the 08′ year, and that’s only a part of a larger payout of $450 million that the media neglecting. The larger percent of that sum went to execs. in the Financial Products Unit, which is the group responsible for insuring risky securities tied to high-risk mortgages that collapsed. Those quick profits in the short term cost the company $40 billion last year in the mist of the meltdown.
AIG’s new CEO, Edward Liddy, said he finds it distasteful but in a letter to Treasury Secretary Timothy Geitner he said, ‘Quite frankly, AIG’s hands are tied. Outside counsel has advised that these are legal, binding obligations of AIG and there are serious, as well as business consequences for not paying. Retaining key traders and risk managers is critical to our goal of repayment. Having contractual commitments is at the heart of what we do in the insurance business.’ UH…WHAT!!?? Let me begin by explaining where their audacity came from. The Grant for the first lump sum of money didn’t come from any Congressional vote, it came from authority that the Federal Reserve had without congressional voting based on the Assest Relief program from 1932 in the wake of the Depression under President Hoover. Which basically means the Federal Reserve, being chaired by Bush-y Ben Bernanke and ex Goldman Sachs CEO and the then Treasury Secretary Henry Paulson, came to congress last September and announced (not asked) that we are lending $80 billion to AIG. This money went out without any strings attached because it was done hastily. Secretary Paulson and some within the Bush administration argued about a doom and gloom that would occur if we didn’t take those actions as quickly as possible. Sort of like our rush to war with the smoking gun/mushroom cloud theory. He mentioned stocks collapsing and credit freezing, all of which occurred anyways and still is occurring today. The TARP money they have and will receive, along with banks, under the Obama administration now is attached with many restrictions and more congressional control. So much so, that many banks have opted to not join the program or return TARP money because of it.
The hopeful argument our government is working on making is that we are the owners of that company, de facto, and probably legally. We, the taxpayers, represented by our government, own 80 percent of the equity. Those contracts that were made by their previous owners, should be void once the ownership torch had been passed to us. When Mr. Liddy says partly it’s legally binding, partly it’s to retain people, looking at the record, these do not sound like people AIG should be that eager to retain. Having the argument that the people who made these mistakes and the decisions that turn out badly be the ones to undo them isn’t necessarily the smartest course. It is often the case tha
