US News
AIG, Obama under fire as Congress, public take aim (Roundup)
By Pat Reber Mar 18, 2009, 22:04 GMT
Washington - The US Congress tapped into growing public ire over bailed-out insurance giant AIG's payment of bonuses as legislators Wednesday explored ways to reclaim the 165 million dollars.
At the centre of the storm was American International Group (AIG), the world's largest insurance firm whose near failure in September 2008 over insuring questionable financial instruments helped push a teetering US financial system into rapid descent.
With an estimated 180 billion government dollars keeping AIG afloat, the country erupted in outrage when AIG paid 165 million dollars in retention bonuses over the weekend to the very traders who had created the problem.
US President Barack Obama fended off calls for Treasury Secretary Timothy Geithner to resign over his failure to stop the bonuses, and vowed to end the US culture of corporate greed.
Some fingers were pointed at Congress itself, for passing stimulus legislation that grandfathered contracts signed for bonuses and executive pay up to mid-February, when the law was passed.
Other blame was laid at the feet of the Federal Reserve, which according to testimony before the House Financial Services Committee from AIG head Edward Liddy had known about the intention to pay the bonuses all along.
Whoever was at fault, Representative Gary Ackerman reflected the irate messages flooding congressional offices.
'There's a tidal wave of rage throughout America right now,' Ackerman said. 'The taxpayer knows that they are the ultimate sucker on the list of who pays for all of the greed that has been going on in the marketplace for years and years.'
At least one employee received more than 6 million dollars.
Liddy, the man appointed to head AIG by the US government for 1 dollar a year when Washington took over 80 per cent ownership of the firm, conceded to Congress that the 'patience of America's taxpayers is wearing thin.'
But he defended the bonuses, saying AIG was contractually obligated to pay them and that he was trying 'desperately to prevent an uncontrolled collapse' of the business.
He said the only way to 'avoid systemic shock to the economy' was to pay the bonuses in order to keep the traders who were sorting out the malaise of a remaining 1.6 trillion dollars of risky assets at the centre of the AIG crisis.
He said the financial products unit had already shown considerable progress in whittling the sum down from 2.7 trillion dollars.
Subcommittee head Paul Kanjorski and other legislators wondered why Liddy had not chosen to break the contracts and allow the legal chips - possible lawsuits from traders - to fall where they may.
As a conciliatory gesture, Liddy said that just that morning he had asked employees to 'step up and do the right thing' by offering to return at least half of all bonuses in excess of 100,000 dollars.
'Some have stepped forward and offered 100 per cent,' Liddy said. 'We are working to ensure the highest level of employee participation in the days ahead.'
But legislators were not satisfied, insisting that zero bonuses should have been paid. All told, AIG is apparently obligated to pay 1 billion dollars in retention bonuses over the coming year.
Obama has ordered Geithner to figure out how to block future bonus payments and recover what's already been paid out.
Ideas being floated include up to 100 per cent taxation on bonuses paid to bailed-out firms; a lawsuit by the US government as the main shareholder in the firm; a criminal investigation into whether AIG violated its fiduciary duty; and deduction of the bonus pay from future loans.
'We should be exercising our rights as owners to say these people performed so poorly ... we are justified in rescinding the bonuses,' said US Representative Barney Frank, a Democrat and chair of the House Financial Services Committee.
Pressure also grew on Wednesday in Congress and from the New York state's attorney for AIG to divulge the names of bonus recipients.
Liddy has refused, citing threats of bodily injury to traders and their families.
Obama, who was departing for two days in California, insisted he and his administration were not responsible for creating the AIG 'mess.' But he added that ultimately, the 'buck stops' with him and noted the new oversight authority his government was setting up.
Jose Baca, a Democrat on the committee, said Americans felt moral outrage.
'Isn't there any remorse or feeling ... for human beings who have lost their jobs, have lost their homes and, yet, we're giving out 165 million?' Baca said.
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Older Talkback
page: 1
...another stellar example of the boy king and his tricycle peddling cabinet.
The president of the U.S. flies around in luxury jumbo jets while racking up huge deficits ... and has more luxury jumbo jets on order!
Paying bonuses and benefits to people that bleed the U.S. government dry is just business as usual. The president, Congress and minions all do it as much as they can.
but lance can't die as he is the devils offspring.
No, he isn't. He, she, it, whatever it is, is not one of mine. Blame it on that other guy. -His Satanic Majesty, THE Devil.
He's waiting for the extensive mental health coverage that he obviously lacks. Bad news - idiocy is not covered.
==============================
OBAMA: I'm the president of the United States. We've got a big mess that we're having to clean up. Nobody here drafted those contracts. Nobody here was responsible for supervising AIG and allowing themselves to put the economy at risk by some of the outrageous behavior that they were engaged in.
(YES, IT WAS THE PRIOR GOP ADMINISTRATION - CUTTING BACK ON REGULATIONS, AND LETTING LOBBYISTS RUN THE SHOW)
We are responsible, though. The buck stops with me. And my goal is to make sure that we never put ourselves in this kind of position again.
(THAT'S CALLED 'ADULTHOOD'; A STATE THAT SP4 WILL NEVER ATTAIN)
QUESTION: Mr. President, a new round of bonuses from these contracts are coming out. What would you say to the American public to quell the anger because people are angry about this new round that's coming out? There's more bonuses are said to be coming for AIG executives.
OBAMA: Well, I don't want to quell anger. I think people are right to be angry. I'm angry. What I want us to do, though, is channel our anger in a constructive way. And the most important thing we can do right now is stabilize the financial system, get credit flowing again to businesses and consumers, and make sure that we change how these businesses operate so that they don't put us in a situation in which, when things go bad, the taxpayers have to foot the bill and when things go good, folks are getting not just $6 million bonuses but $30 million or $40 million bonuses.
(THAT'S CALLED GETTING BACK TO THE POINT. EVEN DOGS GET ANGRY. HUMAN BEINGS HAVE BRAINS AND REASON)
The problem here comes from the idiot brigades who do not listen; or do not comprehend. They whine like little pussies about the bills; while forgetting why we have to make those expenditures. The right-wing rich guys doing the belly-aching for big bucks just confuse the public, and the delays caused maske the situation worse, by the day. The GOP has no answers; just complaints. And as a spokesperson, someone who lost the Presidency; but in his lack of understanding, thinks that earmarks are the primary problem.
The AIG contracts existed in 2007 and 2008 - who was President then? The first AIG payments were under Bush.
Now, the public is incensed; and has once again lost sight of the fundamentals. The only one making sense is Obama. This hullaballoo will make paying for any further problems tougher; since Congress is more interested in getting re-elected than in solving the nation's problems.
For how many YEARS have entitlements been a problem? Why haven't they done something about it? Potential alientation of voters.
It's true that Bush's bailout plan was toxic, but Obama's plan is equally, if not more toxic than Bush's was.
In addition to the $2.7 trillion to bail out corporate America, Bloomberg reported several weeks ago that Obama's plans include seeking an addition $9 trillion for further corporate bailouts. That's nearly a staggering $12 trillion! That's more than the total cost of the wars in Iraq, Afghanistan, and Pakistan combined.
I'm no economic genius, but I see three notable problems immediately surfacing in Obama's bailout plans.
FIRST: The present crisis stems mostly from shady mortgaging practices which are collapsing when the victims and the gullible are coming to the reality that they can't pay. So Obama would like to throw $12 trillion at the crisis to bailout corporate America and see if he can't jumpstart the economy again. But in reality, $10.5 trillion would completely pay off every single mortgage in America. Then what reasons other than internal corruption and greed would AIG and like organizations have for a crisis?
SECOND: Obama has no guarantee at all that his plan is going to work. Bush's huge stimulus package didn't do anything to help the situation. It appears to me to be nothing more than a huge gamble with America's future at the expense of the American taxpayer.
THIRD: As of now, He has no plan in the works for paying back all this money. The usual wells are running dry. Medicare is already cashing in its bonds, not taking in money. So he can't get it from there. Social Security doesn't have it either. Making the increases in taxes necessary to pay off such amounts, besides being political suicide for himself and the Democratic party, would most likely stall the very economy he hopes to recover. The only possible option I can see is to find countries that could be persuaded to buy up the American debt. You want to know why he's being so chummy with Europe and promoting that America should Europeanize? My opinion is that he's looking for future partners in European nations to buy huge portions of American debt so he can continue on with his spending frenzy.
My meager retirement portfolio has only lost $70,000 in this present crisis. Where's my golden parachute going to come from? But if corporate America gets trillions, it seems that I ought to be eligible for something other than the bill.
Well, that's my humble opinion.
it's time to impeach Obama and bring in a real man ..Dick Cheney.
did i really say that? someone shoot me please preferable in the face with bird shot.
page: 1
sp-bungholeMar 18th, 2009 - 22:18:56
hellooo yes the is president Obama .not him again.
y'all should come and meet the mother in law .that does not make me wrong
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