AIG rage: Washington is just as guilty

The only way we had a housing bubble was do to make bad loans and it seems that we want to do the same thing again. With this in mind do you realize that at this point with an average work force of approximetly 160 million and a 16 trillion debt, that’s a 100,000 thousand bill each working person owes. Think about how many of thoes people could pay that back. Please you need the government to stop kicking the can down the road and face the problem now.

I hope congress reads the contract they are putting together to buy bad assets for once and if the taxpayer is investing 85% and private market 15%. I expect the upside to the tax payer to be 85% of the profit and nothing else would be excepted or I will take personal action to make sure the american taxpayer will be informed.

We demand people be accountable for there actions, yet washington takes is taking no reponsibility for AIG

The bonuses, especcially those around 2007/8 sound, not like retention bonuses, but rather ‘Hush Money’. Who knew what and when? These questions need to be asked.

Mad about the bonuses? Yes, we are. Totally unfair and un-American. But, at the risk of swimming against the flood, I would offer these two points:

1. 165 million is .07%, seven one-hundreths of one percent, of the 220 billion AIG has received. It is a terribly small amount in the context of the entire program. (See the CNN charts)

2. Now, while we rage, the depression and failures continue. The needed repair and re-legislation of the American economy is taking a back seat while we spend weeks trying to extract revenge based on the .07% of misallocated funds.

Let’s stop. We have expressed our rage. Let’s appoint a committee to find the wrong doing and the wrong doers and get on down the road dealing with the real important issues.

TC

When it was stated that Enron was just the tip of the iceberg,I don’t think anybody was paying attention.It is just criminal the amount of corruption and greed there is on Wall Street, and they have a willing accomplice in the Federal Government….The SEC, the government body assigned to watch out for our interests has basically stuck their head in the sand…and it is still there…..Now Wall Street,and the Government are busy pointing their fingers at each other and the news organizations are eating it up and they (the news organizations) continue to spin it ad nausium….Its just the “Shell Game” on steriods.Big Bonuses paid to executives of failed companies may not be illegal, but it is immoral and unethical…anybody reporting to me, who engages in unethical behavior would be terminated immediately….but who terminates the CEO,and his cronies…in a publicly traded company, that would be the responsibily of the Board of Directors,and they fall in the catagory of Cronies….it all just sucks…

During the Clinton Administration, Congress set the stage for today’s economic crisis. Many of the incompetents in Congress that fueled today’s crisis are still in office.

I agree with popular opinion and the media that executive compensation in the financial sector is divorced from reality and unjustified but these compensation practices were set in motion by Congress. Two questions:

Why isn’t the media focusing on Congressional culpability?

Can the editors of CNN, Money, and Fortune allow their commentators and reporters to perform a true root cause analysis of the current economic crisis?

I would like to see Congress tax themselves 100%. Why doesn’t Nancy Pelosi and Obama give up their paychecks for the bad jobs they’ve done?

The government deserves more blame than AIG … WAY MORE blame! Behind our president’s arrogant, jovial, photo-op loving attitude is double-talk and a socialist agenda that is going to destroy this country. He talks about American’s needing to learn to live within their means, yet spends billions, and proposed trillions in debt, for his social agenda. When are reporters and broadcasters going to start doing their job and ask the tough questions? When are investigative journalists going to start investigating? Obama seems to be controlling journalists like a puppetmaster. It’s sad that, in times like this, not only are people losing their jobs and homes, but they are losing what little faith they had left in the government AND the media!!!

I meant to say 2004 not 1974 in my post when the 1975 rules were reversed.

The point is that Finance is NOT an industry.

No!!! It is not.

Finiance is a tool and wall St has been using this tool for fraud and mischief.

The bailout like everything else that the government does has been mismanaged and bungled from the get go. And yet despite that we have our useless politicians wanting to create new regulatory bodies and make other changes to make things even more complicated. Doesn’t it make more sense to fix the already broken entities that are in place and attempt them to make them semi-efficient entities. No matter what the tools running Washington would have us believe Bureacracy will never be more efficient then private sector since government workers never truly have to worry about performance once they are done with their probationary period.

The only bailing out that should have taken place should have been Citi and AIG being forced to break up with loans being made to companies who operated responsibly so that they could buy up portions of the two companies. Big companies have risen and fallen in our past and their is no reason why now we should start propping up private entities just like government programs are propped up with ever increasing amounts of our tax dollars. At least the tax dollars of the 60% or so of us who actually pay something…

The bonus tax is a cover-up by Congress. The folks at AIG did NOTHING illegal – they were operating within a system set up by Alan Greenspan and Congress. They did their job, negotiated their pay, and now get penalized?? If Congress wants to recoup this money, they should tax themselves!! They had multiple opportunities to regulate the market in which AIG lawfully operated. The cost of their failure should not now be borne by the people that were allowed, in fact encouraged, to engage in this activity.

Shame on Barney Frank and the rest of those self-serving legislators.

Why is it that as taxpayers, we can’t seem to get a loan because we don’t have enough income or assets or too many debts to qualify but yet we seem to be deemed worthy to bail out the banks that keep denying us financing?

The people in this country need to wake up! The answer is in the money. Follow where the money trail goes form the lobbyists of the financial companies and you have the answer who is responsible. LOOK AT WHO GOT THE MONEY!! You have a steady cascade of Congressional hypocrites who were bought by 5 billion dollars of financial industry lobbyist money over the last 10 years to turn their backs and pass laws that would prevent the very regulation they are demanding now at photo opps on daily basis. Give me a break, these financial companies were given free reign by our own government to operate unregulated while making enormous profits. They do what capitalists do when given free reign. Is that AIG’s fault? Or any financial institution that bought our government servants for their own good? They did it because the people we elected let them. Who do you think was the biggest recipient of lobbyist money from AIG? Number one was senator Dodd who is head of the Federal Banking Committee and who paid them back by inserting the retroactive date for a ban on bonuses into the stimulus bill that conveiniently made it possible for AIG to collect those bonuses. He recieved more money in campaign contributions form AIG than anyone!! Next we have the legislation that was passed over the last 10 years that gave these people a licence to steal. First you have the Commodities Futures Modernization Act of 2000. This was sponsored by a Republican, endorsed by a then Democratic President which basically ensured their big campaign contributing friends on Wall Street could create the derivatives market that would be able to operate outside the regulatory agencies of the Federal Government. Consequently the derivatives market exploded from 632 billion in 2001 to 62 trillion in 2007. With AIG and everyone else making huge profits along the way. In 1974 the Securities and Exchange Commission (who is supposed to protect us as investors) decided to reverse a 1975 rules that limited investment banks leverage to 15:1. The new limit was raised to as high as 40:1 if the banks computer models deemed they were safe. This was done after a lot of lobbying effort by the financial industry and lots of money thrown at key people to get this done. This is your answer. Why haven’t we heard more of this on the news? Why haven’t people who have saw a significant amount of our retirement evaporate because of these actions getting mad at the real people responsible? Remember one thing that a dictator does to ensure that they remain in power. First thing is to control the media. The current administration has been very good at doing this. It is time that we take control of our government back. I do not advocate “by any means neccessary” but we need to start a government reform agenda from a grass roots level that starts with campaign finance reform. Once you cut off the flow of money you take away the means to influence. The system needs to be torn down and rebuilt from scratch. If that means getting rid of both of the parties in power. THEN SO BE IT. I feel like that character in the movie “Network” who kept advocating everyone to stand up and say ” I am mad as hell, and I am not going to take it anynmore”. I have had it with all of the hypocrites on tv taking credit for trying to solve a finacial crisis that they created and saddling our children with the debt created to fix it. The financial industry is getting all of the money because they have the politicians in their pocket. Don’t be so naive to let them make you think otherwise.

No question that Tim Geithner should go. He lied first by saying that he didn’t know anything about the bonuses during the hearings. And it now turns out that he had instructed Dodd to allow the bonuses tobe paid.
Both Dodd and Geithner were instrumental in making sure that the AIG bonuses would be paid out. Congress should have a full blown investigation started to find out who knew what. What did Pelosi knew?

To Anthony in Ontario, CA, both are greedy but AIG and the rest of Wall Street are greedy for money first and power as a result; politicians (that includes TurboTax Timmy) are greedy for power over others and money as a secondary outcome. You decide if there is a difference.

[sigh] From where I sit, the essence of what AIG did was run a bookmaking shop in London taking bets on which paper wouldn’t make the required payments.

Unlike a real bookmaker, they didn’t keep a balanced book [which profits from the spread] but took a position that may well have been larger than the entire equity of the firm.

Now, insuring municipal bonds that are backed by the ability to impose taxes is one thing — an easy business full of profits. Insuring bonds backed by paper of unknown or dubious quality is far riskier.

And then, to bet the entire firm on it — that’s blazing incompetence.

***
Be that as it may, last September when Lehman was going under, the government decided that AIG couldn’t be allowed to similarly fail because the counterparties on some of its deals would then fail as well.

Those included, as we now know, Goldman, Merrill, Citi, three to five major European banks, and I’ve forgotten who all else. Maybe Washington really did prevent our financial system [and paychecks] from collapsing that weekend.

Still, the new managers had months to figure out just how bad the damage is. Probably, they should have told the government to do a pre-packaged bankruptcy for the firm along about January [in the emotional gap between the Bush and Obama administrations].

In that bankruptcy, the regular and still working parts of AIG would, in essence, be sold to the creditors of the parent company, including the counterparties [if any were left].

Now, if that caused Goldman and Merrill to collapse, so be it. Their error was to put too many eggs in the AIG basket.

AND maybe it wouldn’t cause such a collapse either — the shares of the “new AIG” would have value and the creditors could have made their own decisions as to if and when to liquidate them.

Is there a difference between the two?

The CEO’s of all these companies are just shuffled around from company to company to government and then back to another company. Whatever happened to the good old days when people were hired for their talent and fired for the lack of it? The problem of getting a job based on connections instead of actual skills is obvious. Look at the economic mess we’re in. Talking the talk is not same as walking the walk. Any moron can run a company in the ground, but it’s alittle too much when they get bonuses for doing so.

The federal reserve and treasury have made it crystal clear that our current economic problems are related to “toxic assets”.

Also, it seems fairly obvious that the parties who created these assets have caused a world wide economic collapse, massive unemployment, and huge pension/retirement losses.

Doesn’t it also seem obvious if any bank or hedge fund created these assets knowing of potential negative impact on the economy — they should be labeled as economic terrorists?

Seems like it is about time to get full accounting and discovery on the bailout process.

Doesn’t it follow that the war on terrorism should be directed fully at the counterparties who profited from the “toxic assets” and bailout funds?

Henry Baraboo’s first paragraph and Rmaon’s subsequent comment give your question historical context.

Of course Washington is just as guilty as Wall Street. The latter would not have acted as such if not encouraged by the policies enacted by the former which did so at the behest of academics, lobbyists, and Wall Street firms themselves over the course of the past 40 years.

But what I discern in many of these comments is the recognition that this is a SYSTEMIC failure of leadership. The “best and the brightest” are increasingly perceived as merely the “best connected” and the “greediest.” And this perception is something that will not go away by itself or something that can be dismissed disparagingly as “class warfare – from below.” There is a sense of grievance/betrayal by too many Americans that their leaders have sold them out…

How our leaders respond to this will determine whether CLASS becomes the dominant fault line in American politics or not. Any bets?

Our founding fathers created our government “to serve the people”, but they also knew it was a necessary evil.

If you haven’t, get off your indignant self righteous horse and take some of the blame.

It’s absolutely laughable to see all your readers here venting so much rage about money spent on AIG after most of them quietly sat by and watched their government blow a cool Trillion on the Iraq war in 5 years. Where was your rage when shrink wrapped pallets of cash were flown into Baghdad on military transports, and then lost track of? The money spent on AIG was, in fact, an emergency action. Had it not been taken, the eventual outcome is unknown, but its entirely possible the economy could have experienced a further loss of wealth, far exceeding 160 Billion dollars. I don’t care much for AIG management or AIG itself. But these actions, bad as they seem, have staved off a much larger problem. What’s been thrown at AIG is chump change compared to the larger problem, i.e. the state of the global economy. 160 Billion pays the interest on our national debt for a couple of months. And we’ve been blowing through money like that for decades. So while your all working your self into a frenzy over the actions of your government, so yourselves a favor. Get a clue, will ya??

The President, members of Congress, and everyone else who advocated giving taxpayer money to AIG is responsible for this AIG fiasco.
AIG should have received no taxpayer money.
The company is run by economic idiots. The people who received bonuses should have been fired along time ago, been stripped of all of their assets, and been sent to prison for helping create this global economic crisis. All of the members of Congress and the President who have voted to waste all of our tax money on these bailouts that have not worked should also be held accountable to the American People both civilly and criminally. If these people don’t know how to fix the economy then they have no business being in charge of spending American Taxpayer money. If they would have sent American Taxpayers rebate checks for all of money they have wasted on bailouts that don’t work, every taxpayer would have had thousands of dollars to pay off mortgages, other debts, or spend more money to get the economy going again. In other words, the mortgage crisis would be over, the credit crisis would be over, the stock market would be fixed, and the poorly run companies like AIG, Freddie MAC, and Fannie Mae would be out of business.

I want to see a journalist (who has time to do research) find out how much money institutions who have received bailout cash spent on lobbying and campaign contributions. If companies are giving my money to politicians who gave them my money, then we need to start throwing politicians in jail.

As usual the congress is looking for someone else to blame for their own incompetence and greed. They are the ones who rushed throuh a bill that could not so people had a chance to read it to see what was in it. Now, they are making a show knowing that if they pass this tax on the bonuses that it will be ruled unconstitutionsl. But it takes the front page away from themselves as a source to blame.

The government is more responsible than AIG because they are the ones who allowed it to happen. The American people need to stand together and fire every congress person who voted for the stimulis bill. I am outraged that these people think they can stand in front of the American people and outright lie and twist the facts to make it appear that they are doing right by us. They are just as greedy if not more so than Corporate America. In fact they don’t run our country anymore – Corporate America does! It is time for a new movement!!!!

Ronald Reagan made it to the Presidency riding on the wave of AntiEstablishment/AntiGovernment messages. He used the same simple AntiGoverment message to prejuidice our thinking about regulation.

Tragically, most of stick to sound bytes and slogans because educating ourselves on the issues or the canidate involves too much of work.

I am more offended at the house members for posturing where every attorney in the chamber knows or should know that the law is both ex post facto and a bill of attainder and thus is absolutely unconstitutional

I have to respond to Henry Baraboo’s comment below. He is right on so many levels.

The battle cry of the modern conservative movement is “It’s our money, let us decide how to spend it”. The problem is they only apply that to government and taxation, which is open and apparent. They ignore the other people who are taking their money.

Despite what the executives at big corporations may say, their compensation is not set by a functioning free market. CEOs and those around them have massively manipulated the market, to the point that they essentally name their own salary. This is clear when you see who makes up the boards of directors. They are often dominated by the CEOs of other companies who directly or indirectly benefit from inflating each others salaries.

If you really believe in free markets you know that manipulating a market for personal gain is nothing less than theft. These enormous executive salaries have been STOLEN from three groups of people, share holders, customers, and employees. And now we can add a fourth group, tax payers.

People may say that if this is so bad the shareholders can stop it. That is very unlikely. When a corporation’s total capitalization in in the billions of dollars ownership is distributed so widely that no one really has a vote. Plus, most mutual funds and large investors (such as retirement funds) don’t pay the remotest attention to the way companies are run. They hire third party firms to track the shares they hold (no small task since it changes all the time) and vote their proxies for them, with only minimum instruction. Those instructions very often are simply to vote with management.

The investment funds say that they do exercise influence on management because they simply sell the companies they don’t like. The problem is that insider manipulation of executive pay is pervasive it is almost impossible to avoid.

When government takes our money through taxes it is there for everyone to see and they at least can make it seem that the money is spent for the good of the country (In reality it usually is). When these corrupt CEOs and their cronies take our money it is by deception, manipulation and collusion and it is for personal gain. Who should we be more angry with?

The government includes the bonus language in the legislation none of them read – then they are outraged – give me a break! Then after they include the bonus language and become outraged, they propose draconian taxes on the amounts received. What ever happened to contract law?

Who in the congressional committees knew the bonus language was in legislation and when? Who in the Administration pressured Senator Dodd? Where is the outrage by the American people over this comedy of errors being portrayed by our esteemed leaders as a total surprise when they passed this legislation?

Which company will Congress target next? Will they think that there should be pay limits on everyone so one can not exceeed those limits?

We are three weeks away from becoming France.

Let me see if I have this straight . . . .

Last February, House and Senate Democrats drafted and passed a $787,000,000,000 (that’s billion) economic “stimulus” package, which — among other things — handed American International Group gobs and gobs of cash (apparently, “gobs and gobs” is part of the actual text of the legislation).

In a purely bi-partisan effort, the bill was authored exclusively by Democrats (with Nancy Pelosi explaining “We won, so we get to write it.”). Primary drafting duties, fell to Sen. Chris “Stretch Armstrong” Dodd — who, it is interesting to note, is also a fifth-level Yoga Master.

Demonstrating his mastery of yoga disciplines, “Stretch” Dodd drafted this complex legislative package (some 800+ pages in length) whilst having his head firmly north of his colon. Thereafter, and in recognition of the indisputable need for swift economic action, the newly-minted bill was presented to both Houses for roughly 6 minutes and 42 seconds of debate before voting and passage.

Included in this bill was an amendment, inserted by “Stretch” Dodd himself, which protected salary packages (including contractually-required bonuses) of executives who work for corporate recipients of Congress’ financial largesse — companies like AIG.

Upon passage of the bill, and signature by the President, the U.S. Treasury Secretary Timothy “Doogie” Geithner proceeded to swing the sledgehammer to the public piggy-bank and dole out the aforementioned gobs-and-gobs of dough.

AIG humbly said “Gimme.”

Having accepted the cash, AIG proceeded to put it to good use. Aware of “Stretch” Dodd’s amendment, AIG believed that it was on sound financial and legal footing to pay 73 of its executives contractually-mandated bonuses in recognition of the splendid job they had done thusfar.

Public outrage ensued. Members of the proletariat began to pick up picks, shovels, pitchforks, and torches in preparation for storming the Bastille, in the form of AIG corporate offices.

In recognition of this outrage, “Stretch” Dodd (who by this time had advanced to a sixth-level Yoga Master) simultaneously declared (a) that he did not know about the protective amendment, (b) that he personally inserted the protective amendment (but did not know about it), and (c) that he inserted the protective amendment at the insistence of the Administration (while Obama was taking a break from pondering the all-important NCAA basketball brackets to the irritation of Coach Mike Krzyzewski).

Meanwhile, adding to the chorus of righteous indignation, Democrats Pelosi, Schumer, and Frank insisted that AIG should be punished for fully complying with the clear letter of Democrat-authored legislation. Whereupon, yesterday, the House passed a bill to impose, retroactively, a 90+% tax upon those financial whiz-kids at AIG who got the money.

At this time, it is unknown whether constitutional concepts of “due process” and “equal protection” were considered in conjunction with passing a tax bill that affects only 73 citizens of the American populace.

Finally, blame for fiscal mis-management continues to be heaped upon the prior administration, while another bailout recipient, Fannie Mae (remember them?), plans to pay similar bonuses to its sterling aggregation of executives.

Am I up to speed on this?

Are some of the people at AIG responsible? Absolutely. But of the 116,000 employees, very few had anything to do with this mess. Is the government also responsible? Absolutely. The government knew about the bonuses and let it go. Do you really think Congressmen read the bills they sign? Not a chance. Term limits would be a huge step forward. A career in Congress was never the intention of the founding father’s. We have absolutely no true leadership. The country is more divided than it has been in probably 50 years. Why is it that people join Congress as upper middleclass, but when they leave, they’re millionaires? Something is very wrong with our government. They do not represent the people who voted them into office.

Our so called government. Bunch of traitors. I would appeal to all of our military leaders who took an oath of office to defend this nation against all enemies, both foreign and DOMESTIC. I say if all those in office refuse to resign, the military should show them the door, and let’s elect others that have a real and true passion for serving the people and not their own interests.

Without a doubt in my mind, Congress is fully responsible for the financial fiasco. Repealing the Glass-Steagall Act, passing the Futures Modernization Act, no oversight – all helped lead to where we are now.

As for AIG’s bonuses, what happened to the amendment to the recovery provisions that would end “golden parachutes” and bonuses to companies receiving bailouts? Congress took it out. Many of the Republicans standing in front of cameras, beating their chests like they are 300-pound gorillas, were the same people in favor of allowing bonus payments.

I have an observation, everyone talks about retention bonus. Who are they trying to retain – the ones who got the company in the mess in the first place. Secondly they do not require retention bonus because given the state of the economy I highly doubt they are at flight risk – its not as if they have jobs lined up – these companies do not need to pay bonus to retain them – they will stay – they have no where to go.

The revolutionary idea of “small government” through deregulation and tax cuts gained popularity because of Ronald Reagan.

It only took a “great” idea presented as folksy wisdom by someone we trusted like a grandfather to bring about the collapse of our whole enconomic system.

Break the contracts so the law will get involved. Then we will know that the traders were doing what they were told. They earned their bonuses; Get it? Mission accomplished.

Full accounting of the counter parties to this massive CDS bailout.

Who is responsible? — the counterparty bank/hedge funds and the “civil servants” who looked the other way.

Where or where is the press? Not billions, a multi-trillion dollar story. Not big enough story to stumble on the real profiteers?

I agree that contract should not be broken under normal circumstances, but this is not normal. The government should have required that the terms of these contracts be renegotiated before AIG got a dime of bailout money. I was just reading an article on CNN where several experts in contract law discussed the situation. The consensus was summed up well by Douglas Baird who said “very few contracts are bulletproof”. Why should we have a moral obligation to pay these dirtbags who were performing shady business operations to advance their career. The contract actually had procedures to handle employees who felt they should have been paid. Why not force them to go to court if they feel they earned the money. I doubt many of them would if they had to face the public and explain what they did to earn a Million Dollar bonus.

I won’t take responsibility because of who I voted for. The problem is they are all corrupt and a write in would never win, so we are stuck with an endless supply of corrupt politicians. They are all the same, the name and party is the only thing that changes. Yet Democrats will defend Obama the same way Republics will continue to defend Bush.

It is absolutely outrageous that our Congress is getting away with targeting private citizens in this way. Barney Frank, who helped craft this stimulus bill in Nancy Pelosi’s office, knew the bonuses for AIG were in there, and were exempted !!

And now he wants us to believe he is stunned that these people are getting them, and has the audacity to actually ask for a list of their names ?? Hey Barney, you arrogant incompetent pompus jack-ass —This is NOT Soviet Russia and YOU are not a member of the Politburo !! Congress should be ashamed that this is allowed to even happen in our free country. Our country was founded on the rights of the individual, and was meant for protection from exactly this kind of over-reaching abuse of our government.

Its high time for term limits for these elected officials when they become so full of themselves that they condone this kind of harrassment of our fellow citizens. Wake up people, these PIGS are just creating this dog and pony show to keep people from questioning where the Billions..–not millions —- BILLIONS of our tax dollars went, that were funnelled to the well connected bankers here and abroad.

I think people are missing the bigger picture here w/ regard to the government stepping in and re-negotiating contracts within private corporations in the name of the public good. Even though I’m against the bonuses, I feel that was something that should have been handled a long time ago. Usually, the only way to changing terms of a contract was due to a bankruptcy situation where a judge would appoint a receiver who would alter terms. Thereby allowing the corporation to operate until it could be sold or liquidated. This wholesale idea of re-negotiating contracts for the “public good” is a very scary proposition. Corporations could avoid bankruptcy and just have their contracts w/ customer’s, vendor’s, and employee’s re-negotiated in a forced setting w/ little recourse in the name of the “public good”. This is a very slippery slope to go down. AIG, GM, and Chrysler should all be in bankruptcy court where they would continue to operate, but only under the supervision of a receiver and the court. The airlines, railroads, hotel chains, steel companies, and utilities have all been through bankruptcy and continue to operate. Bankruptcy court gives an open arena for the fair and objective disposition of insolvent corporations. This new idea of secretly re-negotiating contracts behind closed doors for the “public good” is a very frightening proposition. The American people need to keep this outrage up at a high level.

WASHINGTON!!!! What happened to oversight, Glass-Steagall Act, and taking responsibility? They chose to ignore the warning about Fannie and Freddie and they are now all to quick to blame the White House. Remember 2006? The markets were riding high and the democrats took over congress. I’m not saying democrats in congress are solely to blame, but they must share responsibility. Harry Reid said it best back in September, “No one knows what to do.”

This is a no brainer to me….it’s the government’s fault. First, they illegally take public money (taxes) and invest it into private companies, UNCONSTITUTIONAL. Then, they vote on bills that they don’t even read. I mean come on, we’re supposed to believe that no one caught that provision in the bill that gave AIG this loophole before the vote took place? Finally, they pass a bill to tax this money at 90% in another knee jerk reaction to public anger over the mistake they created in the first place!!!! By the way, using the tax code as a form of punishment, UNCONSTITUTIONAL….it’s considered an attainment bill. They might as well pass another bill stating that all TARP recipient CEO’s are criminals. It’s an outrage!!!! Americans need to rise up and fire all these congress men and women, and put people in the position that want to work for us, the way it was meant to be.

I agree with Henry. The buck stops at the “CEO” president…

When Hugo Chavez or Vladimir Putin step in and arbitrarily void business contracts everyone in the US is outraged. When congress does it, these same people applaud. Contracts form the entire basis of American society. Just because congress doesn’t like the contracts that company’s have doesn’t mean they can nullify them.

Also, I work for a major non-profit. Most of our charitable donations come from the people earning these bonuses. Wiping out the income of the wealthy will cripple charitable organizations even more than they already have been affected.

Washington is more guilty by far. The bailout was ill-conceived from day 1 and now they want to retroactively change the rules because their simple-minded morality is offended by these bonuses.

Shame on Reid, Pelosi and Geitner for their incompetence and phony outrage. They just blew a TRILLION dollars of taxpayers money with less due diligence than most people put into buying a car. These are the same people who put billions in useless earmarks into the stimulus bill to pay votes back. And they have the gall to claim the moral high ground? Shame on the whole lot of them in Washington.

THE FEDERAL RESERVE DESERVES ALL THE BLAME.

13 firms receiving federal bailout owe back taxes
By STEPHEN OHLEMACHER – Associated Press Writer

At least 13 firms receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes, a key lawmaker said Thursday.

Rep. John Lewis, D-Ga., chairman of a House subcommittee overseeing the federal bailout, said two firms owe more than $100 million apiece. “This is shameful. It is a disgrace,” said Lewis. “We are going to get to the bottom of what is going on here.”

The House Ways and Means subcommittee on oversight discovered the unpaid taxes in a review of tax records from 23 of the firms receiving the most money, Lewis said as he opened a hearing on the issue.

The committee said it could not legally release the names of the companies owing taxes. It said one recipient had almost $113 million in unpaid federal income taxes from 2005 and 2006. A second recipient owed almost $102 million dating to before 2004. Another was behind $1.1 million in federal income taxes and $223,000 in federal employment taxes.

“If we looked at all 470 recipients, how much would they owe?” Lewis asked.

Lewis said the panel plans to review tax records from other firms receiving federal money, but he was unsure if it would look at every firm.”We’re not done,” he said.

Banks and other firms receiving federal money were required to sign contracts stating they had no unpaid taxes, Lewis said. But he said the Treasury Department did not ask them to turn over their tax records.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, told the hearing that if an executive signed a contract knowing that information about unpaid taxes was false, “that would potentially be a crime.” He said his office will look to see if crimes were committed.

No one from the Treasury Department appeared at Thursday’s hearing. Lewis said he asked Treasury officials for a private briefing on their efforts to uncover unpaid taxes, as well as someone to testify at Thursday’s hearing.

“They said no one was available,” Lewis said in an interview.

The Internal Revenue Service “has every expectation that these amounts will be paid and is committed to collect every dollar of taxes that are owed,” IRS spokesman Frank Keith said in a statement. “The IRS recognizes that those entities that receive taxpayer support have a special obligation to pay their taxes, and these taxpayer accounts will remain closely monitored by the IRS to ensure that the full amount of taxes due are paid.”
Keith noted there could many reasons why a taxpayer has an unpaid balance. For example, taxpayers could be challenging their bills.

“In and of itself, this does not signal any intent not to pay,” Keith said.

Treasury Secretary Timothy Geithner is already under fire on Capitol Hill for not preventing $165 million in bonuses from being paid to employees at troubled insurance giant AIG.

People will ask, said Rep. Artur Davis, D-Ala., why there are “large companies getting taxpayer dollars, making false representations, and we can’t even name them, much less make them pay the money back, much less prosecute them.”

Davis continued: “Will they get their day on a billboard, hopefully?”

“Absolutely,” said Barofsky. If someone lied, he said, “They need to be prosecuted.”

The revelation is sure to spark outrage on Capitol Hill, where the House is expected to vote Thursday on a bill that would impose steep taxes on employee bonuses at AIG and other firms that have received bailout money.
To date, the Troubled Asset Relief Program, or TARP, has paid out more than $300 billion to private companies, with billions more on the way.

AIG and government are of equal blame here. It starts with AIG getting involved way over their heads with CDS backing CDO’s with no way to hedge those policies/assets.

The housing boom goes bust and AIG cant possibly pay for all of of those CDS’s issued. Thanks AIGFP!!! The government should have recognized this and let them fail right there as a result of their incompetence.

But, rather than let them fail, the govvie decides to give Henry Paulson the reigns to the countries financial future and bails them out because Goldman Sachs was the largest holder of AIG credit default swaps. Are you kidding me? The wool has been pulled over our eyes and there isnt a damn thing we can do about it. The taxpayer is hosed for the next 3 generations.

Stop the bailouts now, let the banks fail, for God sakes let AIG fail and re-regulate the industry and start over. I’d rather take our lumps now as a country and get this over with than take this crap for the next 10 to 60 years.

BTW, 165 million in bonuses is the least of our worries, I love how the media harps on this one point while the powers that be work behind the scenes and line their pockets with taxpayer money.

The pseudo conservative droids are hacking up hairballs at President Obama and just about any Democrat they name in Congress. Thye ignore that this bailout nonsense was started by bush junior and hank paulson. The problem stems from the incestuous relationship between business and government. The conservative movement has pushed the idea that the primary role of government is as a facilitator for business and that all regulation is bad. Now that it has lead to the predicted mess they froth at the mouth about government’s role in this. The failure of government has been that they followed the conservative recommendations and did not stay on the back of business and finance. Those boys will cheat any chance they get.

There is also a serious problem with really grossly excessive salaries for supposed leaders. Salaries paid for playing financial games have gone beyond the realm of any reason. Managers, marketeers and financial parasites have cheated working people for 30 years now. The golden goose is dead and there are no more eggs. Finance and upper management compensation needs to be dialed back probably 80 to 90 percent. It should be competetive with salaries paid in the non union factories in the South. These finance people are obviously no brighter and certainly no better than the union auto workers in Detroit, despite what their arrogance leads them to believe.

Lets face one is just as guilty as the other, one took advantage and the other turned a blind eye. Look what happens when there are strings attached to new government money, there are no takers? Even states want a say as to who, what and why as to what they can do with the money. Interesting to me is when strings are placed on the money there are less takers, which leads me to the conclusion that they really did not need it in the first place. As I called it before government Welfare, and everybody lined up for it when it was for free, saying Thank You President Bush.

Both! Congress declined to regulate credit default swaps which caused the massive losses at AIG. And guess what? They still haven’t! Idios! A pox on both their houses.

I wish people would stop saying Congress is at fault for allowing the bonuses to be paid. People…..AIG had a CONTRACT with these employees. If they didn’t pay the bonuses, then AIG would get sued and the federal governments name would also be in the suit.

Contracts should not be allowed to be broken. That’s why we’re in this mess in the first place. People walking away from their home because “it’s not worth as much” and “I didn’t make a million on it” should have their wages garnished!!!

Just think, you have saved the cost of circus tickets. Don’t worry about how much it is really costing. What, me worry?

Senator Dodd is a big liar. Wasn’t he implicated in Country Wide scandal. The politicians are all guilty as sin. I wonder how much money was passed under the table? They all knew, but thought the American people were stupid. Let not anyone forget at election time. Shame on all of them.

The3 government and Wall Street – you scratch my back and I will scratch yours. As to who is more guilty, which came first, the chicken or the egg? And the American public keeps electing these self important entertainers (at least they entertain until the crash).

How does our legislature have any right to question someone else’s ability to manage effectively and efficiently? How many years have they been watching social security and medicare go broke without action? Maybe our congress should fall on the sword as well!!!

Ken from Chelsea, MA, commented below with the full printing of $165 million. In addition, I’d like to type out $11,000,000,000,000.00. I typed it out because most people will never see that amount of money in their… oh wait, that’s how much our irresponsible government owes the world, sorry. No one will ever see that amount of money in their entire lives; that is, until the Federal Reserve, which basically deserves to be Public Enemy #1 at this point, inflates our currency out of existence, and $11 trillion buys a loaf of bread.

Thanks, Paul, for posting the views of those of us who oppose the arrogant, irresponsible, unconstitutional actions of our renegade government, even if you don’t agree. It’s nice to know you were listening.

AIG is responsible up to the point the government intervened and threw guys like Dodd and Frank into the mix. Two of the biggest screw ups in Congress along with Pelosi and Reid. If you were offered 170 billion, what would you do, take it or go out of business? The Congress could have attached conditions but they didn’t.

You have to remember if the government did not have a crisis to tend to, why would we need them? Obama’s chief of staff mentioned that a crisis should never go to waste. Well here we are with the Politicians taking advantage of several crisis they created.

At the end of the day of the american voter needs to look in the mirror and take a lot of blame. You voted these dopes into office, term-after-term. You purchased items you could not afford which led to AIG discretions. Some pony up and take responsibility.

Essentially the government IS the company. The politicians, who are bought and paid for by the financiers, are just “dancing with who brought them to the party” while pretending that they are “shocked, just shocked that there is gambling going on in here”. Pure hypocrisy.

Congress enables AIG to carry on like criminals with a ‘get out of jail free’ card. Just read this in the Baltimore Sun: 13 firms (who I call the Financial Terrorists) receiving billions of dollars in bailout money owe a total of more than $220 million in unpaid federal taxes-DISGUSTING!

The government. I have never seen such absolute incompetence.

Paul, nice job with this article. I think a lot of people who just watch the news are falling for the bait. Most people are so caught up in the coverage of the AIG bonus, that they don’t realize who’s to blame. Why would I be mad at AIG for giving out bonuses, when the bailout package had a loophole that allows for the money to be used for bonuses! It is absolutely ridiculous that there was not one restriction put on how the money could be used. AIG could have flushed it down the toilet if they wanted to. Now that the government realizes they made a mistake, they want to go above the law and tax the hell out of these bonuses. If we let them get away with this “Emergency Tax” bill, they might just decide your next bonus is fair game!

Then again…If I was lending out someone else’s money (the taxpayers), I probably wouldn’t be too concerned with restrictions. The government figures “who cares, it’s not my money”. It is appalling what is going on in our government and it feels like there is not much we can do about it. This article alone cannot fix the problem, but at least it gives people a chance to express their frustration and spread the word to those people who are being fooled by the government’s propaganda campaigns.

Our government has been helping the big banks do what they have been doing in return for campaign contributions. Congress should be turned out and a witch hunt should begin at the White House. We want our money back!

Actually, both are to blame. As to how much — well, that depends on your point of view. Personally, I believe the biggest blame lies in the hands of the voters who keep voting for the same congressmen and women term after term.
How can anyone be outraged at the government’s lack of planning and it’s knee jerk reaction to the problems that faced AIG last year? Likewise, how can the public be outraged at the greediness and arrogance that the fund managers displayed during the last year and a half as they peddled worthless credit-default swaps to unwary investors?
The public, with its callous disregard to any problem that doesn’t directly affect it, is the problem. As long as “we the sheeple” keep voting for the same congressmen and women and the same senators who shamelessly spend the taxpayers’ money in any way they see fit, we deserve what we get. Why would anyone in Washington want to fix things? Think about it –. If you were in Congress, would you want to change what you have? Not me. I like the idea of giving myself a raise each year, having my own retirement plan, and having a salary that is higher than most everyone else’s for performing half as much work. Why would I want to change that?
So, the question really boils down to this –. Do you really want to fix things? Then get off your duff, stop watching Jerry Springer, stop playing video games, educate yourself and educate your children and vote for people who will be your voice in Washington. And if they fail, get them out of office as quickly as possible.
Oh, I forgot — an educated populous is more difficult to control. It’s best if we keep ‘em dumb.

The government, especially congress deserves by far the most blame for the whole mortgagee generated mess. They also should not have put the executive bonuses to AIG in the bail-out/stimulus legiglation. (Who got paid: Obama and Dodd by contributions,maybe AIG negotiator was bonus recipient?) Congressional outrage is a smoke screen to distract attention from their own duplicity, incompetance, and wrongheaded policies. AIG, on the other hand should not have paid the bonuses and let the executives go to court to try to inforce their contracts.

AIG and other finance companies committed the crimes; the government failed to enforce.

No more bailouts. We don’t need all of these big banks, certainly not more than 2 or maybe 3 (BAC, JPM and one other could handle everything). It’s better to have lots of small, healthy banks.

Politicians need to take a deep breath and let the FDIC move in on the AIGs of the world: close them down, chop them up, and sell off the assets.

Both parties are necessary players in this mess. I do not see how you can find one culpable and not the other.

One quote from cnn Buzz author Paul has me a bit riled up:

“I agree with Doug to a point. I don’t think that letting AIG fail is a smart idea since the government has already put in so much effort to keep it afloat. It’s too late to be having the argument about whether AIG should be allowed to fail.”

#1 past efforts represent what economists would call a sunk cost. It is past history. Present decisions should only take into account the present value of the proposed action relative to their costs of implementation.

#2 my brother, realizing that Government is probably more interested in saving face than letting go of sunk costs bought a lot of bargain basement AIG stock and so far has done well. He is profiting off the disparity between what AIG is really worth in the market to what value the govt will put into them to prop them up, all in an effort to save face. Good call!

#3: The example above highlights why I, and presumably many others, are staying clear of the markets (i.e. not having confidence). I can evaluate potential risks and returns in a free and open market. I cannot do so when the government is capriciously intervening. I think restoring confidence in the markets is worth more than saving some banks too big to fail, and I am running my finances accordingly. Obama says to be confident and spend, but I cannot do so at this time.

Both share blame in this matter, but AIG is far more guilty. The government was just stupid. They should NEVER have “caved” to lobbyist pressure to provide bailout monies with NO compensation restrictions. But AIG is clearly the “robber baron” in all of this. Not only did those heinous villans destroy the economy, they then duped and raped the American taxpayer. What I want is the NAMES of those people who received those bonuses. I want them posted on every financial website in the world. In a nutshell, publicly vilified. Call it a modern day version of being placed in stocks.
Personally, rather than get the money back from AIG, what I want the government to do, BREAK UP AIG under the anti-trusts legislation, so that NO company ever again becomes, “so large that we cannot let them fail”. THAT is what really got us into this mess.

The real is mess what created the crisis. The government is clearly to blame for that mess. After all they were the ones who allowed credit default swaps and related securities go unregulated.

However this should not deflect any blame from AIG, in fact I believe it makes them even more culpable. When the matter was before congress, during the Clinton administration, I am sure AIG was in there, lobbying with all their might to prevent the regulation.

The government is also clearly to blame fro the mess they made out of the bail out, they should have known that the people at AIG and the banks would take all the public’s money they could get away with. Their arrogance and greed would cretainly overshadow any responsibility they would feel toward sould stewardship of the public’s money. After all they don’t seem to have felt responsibility for sound stewardship of their investors money.

the government. Dodd, Frank, Carter, clinton in particular. When I bought my house, I had to put at least 10% (maybe it was 20%) down. I had to have something to lose if I defaulted. Then came CRA, securitization laws, Congressional demands that Fannie/freddie buy junk mortgages, etc.

I hold politicians TOTALLY RESPONSIBLE. They were the ones that made the laws. they were the ones that failed to provide oversight for regulators, rating agencies, etc.

If we had stuck with requiring people to actually prove they could repay a loan, I believe the CDO / CDS / subprime problems never would have happened because banks would have gone under if they had to keep the bad loans they issued.

What really needs to be done is for investors to sue rating agencies. And it looks like AIG may start the ball rolling by suing Countrywide / BOA for misrepresenting the risks of the loans insured by AIG.

What I want to know is why no one is demanding that members of congress who got campaign contributions from companies (banks, auto companies, etc) receiving TARP or taxpayer bailouts are not VOLUNTARILY returning all their campaign contributions. but of course, that would be demanding fairness, integrity, and personal responsibility from members of congress. Where is the outrage from voters and media pundits on that issue.

There is plenty of deserved blame to go around. All of Wall Street is what Rep. Paul Hodes said about AIG. The politicians in Washington are interested in grandstanding for the folks at home, buying votes and schnorring campaign contributions but not in doing anything useful, unless it is an unintended side effect (if they did something and it went wrong they could be blamed). The American public would make P.T. Barnum swell with pride (the latest being the apparent conclusion on the part of the populace that by lending to itself the government somehow creates money). It is all a smoke and mirrors show to cloak the rich grabbing more. Don’t get an ulcer.

$165,000,000.00. I typed it out because most people will never see that amount of money in their bank account.

However, I don’t think it’s the amount of money that most people are upset about. It’s the arrogance of the people getting the money. It’s all about greed. Until our society learns to put God, our families and other fellow human beings before money, then we’ll be going through this same scenario in another 7 years. The recessions and bubbles are getting closer and closer together. Instead of a recession every 10 years, they’re now coming every 7.

Government without a doubt… the market WANTS to let these companies fail and handle the process through bankruptcy which is much better defined. The government might have a role there. Otherwise, unconstitutional intervention should never be excused by the public.

I am so tired of the finger pointing. They all are a bunch of crooks. Why can’t Congress see thay are all part of this. I don’t see them giving up their raise because of the condition of this country. They all helped us get here but are not willing to give up anything themselves. I am so disgusted with all of our government. They are all a bunch of liars and fingerpointers. Get rid of all of them, they all work together. We need to start over. Even Obama has his ACORN group he has to pay off…WHAT A CIRCUS!!!!!