Tuesday, March 17, 2009

Please ignore the Man behind the curtain

Great article today in WSJ:

"The Real AIG Outrage"

"President Obama joined yesterday in the clamor of outrage at AIG for paying some $165 million in contractually obligated employee bonuses" which is peanuts compared to the $173 billion "to fund the government's AIG "rescue." This federal takeover, never approved by AIG shareholders, uses the firm as a conduit to bail out other institutions...Since September 16, AIG has sent $120 billion in cash, collateral and other payouts to banks, municipal governments and other derivative counterparties around the world. This includes at least $20 billion to European banks.

The Beltway crowd has been selling the story that AIG failed because it operated in a shadowy unregulated world and cleverly exploited gaps among Washington overseers...Scott Polakoff, acting director of the Office of Thrift Supervision, told the Senate Banking Committee this month that, contrary to media myth, AIG's infamous Financial Products unit did not slip through the regulatory cracks. Mr. Polakoff said that the whole of AIG, including this unit, was regulated by his agency and by a "college" of global bureaucrats."

And from Fox/Business: "Amid AIG Furor, Dodd Tries to Undo Bonus Protections in the 'Dodd Amendment' Rules"

"Senate Banking Committee Chairman Chris Dodd (D-Conn.) on Monday night floated the idea of taxing American International Group (AIG: 0.95, 0.1699, 21.78%) bonus recipients so the government could recoup some or all of the $450 million the company is paying to employees in its financial products unit...While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. The provision, now called “the Dodd Amendment” by the Obama Administration provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax."


garret seinen said...

Beth, Glen Beck, yesterday, ran a bunch of numbers as to where the AIG bailout money went and where the government was involved since the early 90's. He interspersed it with some Freddy and Fanny info and sound bites from Barney Frank etc. He had Yarron Brook on to explain the immorality of not allowing failures to clean house.
The whole AIG thing suggests gross irresponsibility on the part of law makers, as does the claim of not know what was in the bill that no one had time to read. Isn't the AIG outrage be simply a means to deflect attention from what else the administration is doing?

HaynesBE said...

Yes exactly...the man behind the curtain.