Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?
For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman’s collapse, they feared a systemic failure could be triggered by AIG’s inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG’s trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.
It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure. The payments to AIG’s counterparties are justified with an appeal to the sanctity of contract. If AIG’s contracts turned out to be shaky, the theory goes, then the whole edifice of the financial system would collapse.
Here’s an interesting, if poorly written, item from someone with a friend inside AIG which, if correct, makes one wonder why we are giving them any money if they are about to belly up anyway.
This will all end in tears … and some beheadings if we are lucky.
AIG too big to fail? The Titanic was too great a human achievement and was too technologically advanced a ship to sink.
Truth will play out, AIG has been dead for some while now and has been on life-support with no hope of recovery. The greedy rats just stuck around to clean out the new cheese dumped into it.
So we spent billions on Enemies Foreign in the middle east and have discovered that we are spending trillions on Enemies Domestic.
I still recall taking that oath at the induction center in downtown LA. I just never thought that the US government would be the domestic enemy I needed to protect Constitution of the United States from.
Maybe it is time to appoint a special investigator.
Don’t you LOVE how the politicians knew all this and never told ya? Obamabots must be in mental meltdown mode.
Does anyone here ever read anything?
So far, this morning, the only reporter actually chasing the story is Chris Matthews – and he’s not received any answers, yet.
The Snow-Wyden amendment was accepted by the Senate and would have prevented all of this. Somehow, magically – which means at the behest of some Wall Street lobbyists – the overnight House-Senate conference committee stripped that amendment from the bailout.
No one has been identified, yet, as to who was Wall Street’s flunkey.
You may now return to partisan conjecture.
I’ve been trying to tell people that this whole bonus thing is just a huge smokescreen. It’s the smallest fraction of the issue but they know by quoting what seems like huge numbers and saying the word bonus it will whip people up into a blood frenzy.
it’s 1/1000th of the money they are getting, no one seems to care about where the rest of it is going.
#7 I mentioned these payouts on an AIG thread yesterday. No one commented. Most people are clueless and just defend the crim politicians in their chosen party.
It says on CNN that the AIG CEO (who came in after the gov’t takeover) said the bonuses are “distasteful, but necessary.” You explain to me how the (&(*&#(&*^@#*&^$#(@*&$^#(@*&$^#@$(*&^ they are necessary!!! This just pisses me off to no end. Uncle sam needs to tax that s%!t at 200% to recoup the tax money that we don’t have that went to this fiasco. But then I guess the politicians would probably lose some of their biggest donors…
guess who else got a “bonus/donation” from AIG?
Mr Obama, second largest contribution next to Chris Dodd
THe bonuses are only 1% but they are symbolic of the stupidity and greed that got AIG where they are.
My question is, if they are really mad about giving these bonuses, then why don’t they release the names of the jackasses who are taking them? Release the names of who is taking this money rather than refusing to take it and they will make Bin Laden seem loved in comparison.
jccalhoun & vonchiz – Did you read the article? It’s not about the bonuses sheeple. If you don’t believe me ask Paddy-O!
You are playing into their hands if keep talking about bonuses.
Ignore the man behind the curtain.
I’ve seen it reported that the mortgage security department is in London with the implication being that most of the bonus receivers are British Citizens not paying US income tax.
“But we have to do something!”
Heh, heh.
#13 True. Also, billions of taxpayer dollars went to SocGen (France) & Deutsche Bank from AIG. Wonder what O’mama & crew have to say about that? Don’t hold your breath. The lib media will never ask him on the record about this…
#14–Paddy==absent the bankruptcy alternative, I don’t see how AIG could not pay out on its insurance contracts to all those foreign hedge funds operators.
Seems like “what should have happened” is that AIG should have gone into bankruptcy and all its American Domestic straight insurance products should have been protected if they even needed it and all the foreign hedge funds investors should have been allowed to go bankrupt.
I hope everyone had this type of scenario FIRMLY IN MIND with the rushed legislation. With the rejection of the Snow/Widen amendment isn’t it clear this was all understood?
Yes, AIG was greedy and stupid. Words fail me trying to then accurately describe the actions of our own Congress.
VOTE ALL INCUMBENTS OUT OF OFFICE. (Maybe give an atta-boy to Snow/Widen – – after they explain why they didn’t make a bigger stink about it??
# 15 bobbo said, “Seems like “what should have happened” is that AIG should have gone into bankruptcy and all its American Domestic straight insurance products should have been protected if they even needed it and all the foreign hedge funds investors should have been allowed to go bankrupt.”
Yes, if the taxpayer was going to be left holding the bag it should have been structured the way you proposed. Those in Congress and the Admin (both sides) knew of these ins and outs but chose to screw us over anyway.
So My government is asking AIG for names now. Here you want the list of names of those that are responsible for this AIG mess?
N. Pelosi
B. Frank
C. Dodd
I can not continue to list the remaining 532 congress pukes, I am just too tired of this shit
Despicable assholes aren’t they/ … Commenter’s and AIG.
Do they even realize that Paulson, the guy giving away all the money until recently was CEO at Goldman Sachs in 2004. The same Goldman Sachs that received the greatest amount of money from the AIG redistributions.
And you thought Cheney was the only republican capable of war profiteering with his Haliburton. The republican party has been taken over by the lowest scum ever, and they are reaping a fortune while stupid shit for brains like the above make up crap to complain about that black guy in the white house.
# 18 qsabe said, “The republican party has been taken over by the lowest scum ever, and they are reaping a fortune while stupid shit for brains like the above make up crap to complain about that black guy in the white house.”
I think you are forgetting about the Party that wrote and passed the bill in question, the charge lead by Omama to get his party to write & pass the bill…
Don’t let facts get in the way of your rant though. Continue…
Agree with bobbo that that’s how it should have been done. I like Cringely’s idea of having the government buy up mortgages at about 60% or so.
As to the bonuses. AIG is a very big company that does much more than credit default swaps. It used to be every time I called my credit card company, they would try to sell me AIG auto insurance. Why should executives in other divisions not get bonuses because the CDS screwed up?
Perhaps AIG should just spin off the CDS portion of their portfolio.
The entire reason AIG is going under is because of the insurance payouts. So where did you expect their bailout money to go?
Now I’m reading in some places that the bonuses went to employees in the same unit. That changes things considerably.
#17, Sparky,
Hey, wow, you sure are sparking there. Why would you list Pelosi, Frank, and Dodd? Please explain what they had to do with AIG’s failure.
I realize you trolls are going nutso here, but please, why?
The point of the “bailout” isn’t to help individual banks it’s to avoid systemic failure. The big banks and AIG issued insurance on each others bonds. When one bank fails the other banks have to make good on these policies, but they don’t have the assets to pay up because they over leveraged and the mortgage backed securities they have can’t be sold because no one wants to buy them. If one fails it will likely domino. They’re deeply connected globally so restricting the money to US banks doesn’t make sense.
The banks did take HUGE write downs on their assets. Their stocks have tanked and their dividends have been cut.
In the short-term if you want the money in your pocket to retain any value the US tax payer will have to drop the politics, remove their tinfoil hat, bend over and take one for the team. Otherwise get your Mad Max gear ready cuz here comes the financial pockyclipse.
So we are now upset that an insurance company is using bailout money to actually pay out on valid insurance claims?
I guess some of you have no clue what kind of securities are in a retirement fund’s or 401k’s “guaranteed” accounts.
Hank Greenberg after losing 2 billion…
one more time…
Greenberg after losing 2 billion
http://www.cnbc.com/id/15840232?video=1050699862&play=1
#27, 9yo,
Your handle sounds like Cow-Patty is using a pseudonym.
Greenberg is sounding like a sore loser by suggesting he is the only one capable of running AIG.
What did Frank, Dodd, and Pelosi have to do with AIG? Well they were part of the group that blocked reforms to Fannie Mae and Freddie Mac that helped cause this mess.
Fuck You Mr. “Fusion”. You fucking Moron!